The ratings agency says its action reflects the heightened risk of a widening of Israel's current conflict to include large scale military confrontations with multiple actors.
With President Biden due in Israel today, tensions are high on the Lebanese border after the blast at a Gaza hospital which the IDF blames on Islamic Jihad.
Israel mobilizes: Alaa's store in Tayiba was looted and burnt after he donated 50 bikes to Jewish evacuees from the south. But Israelis have raised hundreds of thousands of shekels for him in a crowdfunding campaign.
Egyptian President Abdel Fattah El-Sisi has himself dismissed out of hand the possibility of taking in Palestinian refugees and is even reluctant to open the Rafah border crossing.
In the support plan for the economy presented by Minister of Finance Bezalel Smotrich, border areas and the city of Ashkelon receive more than the rest of the country.
The Bank of Israel has hinted that it will not cut its interest rate tomorrow, but Bank Leumi, for example, sees room for a cut despite the risk to the currency.