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NSO Group: Israel spyware company ‘at risk of defaulting’

Israeli company NSO Group is at risk of defaulting on its $500m debt following its blacklisting by the US Commerce Department
NSO Group has denied media reports its Pegasus software is linked to the mass surveillance of journalists and rights defenders (AFP)

Israel's NSO Group, which produces the Pegasus spyware used to hack phones, faces a growing risk of defaulting on its $500m debt, following a US decision to blacklist the company, credit rating agency Moody’s announced on Monday.

The company is currently valued at over $1bn, but sales have dropped following a decision by the US Commerce Department to blacklist the company based on evidence that it "developed and supplied spyware to foreign governments that used these tools to maliciously target government officials, journalists, businesspeople, activists, academics, and embassy workers".

The move by US authorities is likely to impact NSO's revenue and increase the probability that it goes into default. 

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This summer, a series of investigations under the coordination of Forbidden Stories showed how Pegasus, NSO Group’s flagship product, was used by governments to spy on activists, journalists and political dissidents. Governments such as Saudi Arabia, Morocco, Bahrain and the United Arab Emirates have been accused of using the spyware.

NSO has denied these allegations and said that its software is mainly used by governments to prevent crime and terrorism.

Moody’s estimates that NSO’s debt is 6.5 times its earnings this year.

The Israeli company has already seen declining revenue since 2020 and it is at risk of breaching an agreement on its debt that could put the company in default, according to Moody’s.

NSO senior management has been lobbying Israeli Prime Minister Naftali Bennett to make the US government remove the company from its blacklist. 

Earlier this month an investigation by international NGOs found that NSO software was also used against Palestinian activists involved in the six civil society organisations recently outlawed by Israeli Defence Minister Benny Gantz.

According to the report, three of the people whose phones were hacked with the software were members of civil society groups that were blacklisted by Gantz for alleged terrorist ties.

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