Bank Leumi will issue NIS 950 million of long term, index-linked bonds on July 31. The issue prospectus entitles Bank Leumi to enlarge the issue to NIS 2 billion.
The background to the issue is the recent decline in returns on index-linked bonds, which has created a demand for index-linked credit. This has, in turn, created a need for bank financing for this credit.
The issue will be conducted by Leumi Finance, a Bank Leumi subsidiary. The bonds will be index-linked, for an average of 13 years. Bank Leumi is committed to ordering NIS 700 million in bonds, leaving at this stage only NIS 250 million for institutional investors and the public, unless the issue is enlarged.
The bank committed itself to buying the bonds at a 4.8% annual interest rate, but the public’s bids will determine the final interest rate on the bonds. The bonds ordered by the bank will enter its nostro and will be sold on the market as required by the bank in the future.
Bank Leumi raised NIS 500 million two weeks ago through three types of deferred liability deeds: index-linked, shekel-denominated, and dollar-denominated. The capital raised is designated for the bank’s secondary capital and will be used for its current operations.
The difference between the deferred liability deeds in the previous issue and the bonds to be issued at the end of July is that the former are considered secondary capital, while bonds are considered deposits, rather than secondary capital.
Published by Israel's Business Arena on July 16, 2001