Israel government bonds are to be included on the World Government Bond Index (WGBI) from April 2020, FTSE Russell has announced in its latest annual Country Classification Review.
In its announcement, Nikki Stefanelli, Head of Fixed Income Index Policy, FTSE Russell said: "We congratulate Israel on their inclusion in the FTSE World Government Bond Index. There was a strong consensus from index users that the Israeli government bond market meets the thresholds of our highest accessibility level."
FTSE Russell, which is a subsidiary of the London Stock Exchange, added, "As a result, Israel local currency government bonds will be added to the index from 1 April 2020 and are projected to comprise 0.29% of the index on a market value weighted basis as of August 2019 based on 13 bonds with $68.2 billion in market value.
FTSE Russell also said, "ILS (NIS)-denominated linkers will also be added to the FTSE World Inflation Linked Securities Index (WorldILSI) from 1 April 2020, and are projected to comprise 1.78% of the index on a market value weighted basis."
Israel's expected inclusion on the WGBI Index has strengthened the shekel in recent months with significant purchases of shekel linked Israeli government bonds.
Bank Leumi chief economist Gil Buffman and other analysts see Israel's 0.29% weight in the index translating to foreign currency purchases in shekels of government bonds worth about $2 billion.
Minister of Finance Moshe Kahlon said, "Entry to the WGBI is an achievement and international vote of confidence in the Israeli economy. The Israeli economy's high credit rating and entry to the world's most prestigious indices like the WGBI will increase foreign investment and growth in the economy. This is a mark of respect for the Accountant General's office which has managed the government debt with thorough professionalism in recent years.
Published by Globes, Israel business news - en.globes.co.il - on September 27, 2019
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