S&P Global on Tuesday downgraded Israel's long-term ratings to A from A+ on Tuesday, citing risks to the country's economy and public finances from the conflict with Hezbollah in Lebanon.
S&P maintained Israel's outlook at "negative".
The rating agency highlighted concerns over potential security threats, including retaliatory rocket attacks against Israel, which could worsen the economic impact.
"We now consider that military activity in Gaza and an upsurge in fighting across Israel's northern border - including a ground incursion into Lebanon - could persist into 2025, with risks of retaliation against Israel," S&P said.
The announcement comes days after Moody's credit rating agency downgraded Israel's credit rating by two levels, from A2 to Baa1, with a negative outlook.
The agency wrote that it does not foresee a rapid recovery for the Israeli economy, as was the case after previous conflicts. It also pointed to a decline in the quality of the institutions and government in Israel which, it said, were not effective enough in preventing the downgrade.
In April, S&P cut Israel's long-term ratings to A-plus from AA-minus following Iran’s drone and missile attack on Israel and amidst the already elevated geopolitical risks for Israel.