Moody's ups Israel credit rating to "A1" from "A2"

NEW YORK, April 17 (Reuters) - Moody's Investors Service upgraded Israel's sovereign foreign and local currency bond ratings to "A1" from "A2" on Thursday, citing fiscal discipline and resiliency to local security and global turmoil.

"Fiscal discipline has been maintained in spite of the many security-related demands on public finances, evidence of its commitment to reducing its large government debt," said sovereign credit analyst Joan Feldbaum-Vidra in a statement.

Moody's now considers Israel to have graduated from the classification of "emerging market economy," given what it calls a competitive edge in high-technology products, a relatively wealthy average for living standards, a deep capital market and an advanced institutional framework.

Feldbaum-Vidra said ongoing financial and political support from the United States and the Jewish Diaspora also provided support, although a large government debt burden continues to be "an important credit challenge."

Moody's rating is now one notch higher than the "A" rating given by Standard & Poor's and Fitch Ratings.

In addition, Moody's also raised the foreign currency ceiling for bank deposits to "A1" from "A2".

A key driver for any future upgrades to Israel's credit rating would depend on a substantial further reduction in government debt, and would also take into account national security considerations. (Reporting by Daniel Bases; Editing by Leslie Adler)