Moody's Downgrades Israeli Banks' Outlook to Negative

The Moody's credit rating agency lowered its outlook for the credit rating of Israel's banking system from stable to "negative," due to the economic challenges it faces in the next 12 to 18 months.

However, the agency did not lower the ratings of the banks themselves, and only two weeks ago has ratified the Israeli economy's ranking with an A1 rating and a "stable" outlook. Moody's also noted the Israeli economy's proven resilience in the past.

The main reasons Moody's offered for the potential downgrading are the slowing down of Israel's economic growth in 2012, which is expected to shrink from 4.8% to 2.8%; the challenges posed by Israel's geopolitical region; and difficulties in exporting Israeli goods to Europe.