As the geopolitical risks mount from the escalating conflict between Israel and Hamas, US credit ratings agency Fitch has put the A+ sovereign credit rating of Israel on a ratings watch negative on Tuesday.

The adverse monitoring position is being enacted due to the risk that the conflict may escalate to the point it draws in multiple actors over a long period.

An escalation of hostilities, as well as human casualties, could trigger a need for significant additional military spending, as it places the nation’s internal infrastructure at risk of destruction, all of which could produce a sustained change in the confidence of consumers and investors. The ratings agency noted that all of these factors could significantly degrade the credit metrics of the Jewish state.

Fitch said, “The combination of Israel’s dynamic, high-value added economy, the record of resilience to regional conflict, preparedness for military confrontations, solid fiscal and external metrics and cash buffers make it unlikely a relatively short conflict largely confined to Gaza will affect Israel’s rating.”

Neither Fitch, nor any other international credit agency such as S&P Global, or Moody’s has ever downgraded Israel’s credit rating. However last week, Moody’s warned that the nation’s credit rating could be hurt should the present skirmish transform into a prolonged conflict.