Israel raises €250m bond at near-zero rate

Rony Hizkiyahu Photo: Tamar Matsafi

The 0.05% interest rate is the lowest ever on Israeli government bonds.

The Israeli government is raising debt at a near-zero interest rate: a €250 million private bond issue to an Asian strategic investor. The three-year bonds bear 0.05% annual interest, the lowest-ever paid by the Israeli government. The Ministry of Finance is enjoined from disclosing information about the buyer, but sources inform "Globes" that the buyer is a government fund of an Asian country, such as Temasek of the Singaporean government. Berkley's Capital, a market-maker in the government bond market, was the underwriter for the issue.

Ministry of Finance Accountant General Rony Hizkiyahu and Deputy Accountant General Gil Cohen led the issue. The Ministry of Finance has previously raised similar amounts in dollars, but this is its first issue in euros. The Ministry of Finance believes that the interest rate is 0.25% lower than it would have had to pay in the public issue of the type that it customarily holds every year.

The Ministry of Finance has held a number of private issues for strategic investors in recent years, raising $400 million in one-year bonds at 1.6% annual interest in 2011 and $200 million in two-year bonds at variable interest of LIBOR + 0.9% in 2012. The Ministry of Finance says that the interest rate was lower this time because the benchmark was the European Central Bank rate, which is zero, with negative interest rates on bank deposits. Also contributing to the low interest rate was positive sentiment towards the Israeli economy, reflected in the announcement late last week by the Moody's credit rating agency raising the outlook for Israel's rating to "positive."

Published by Globes [online], Israel business news - - on July 23, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Rony Hizkiyahu Photo: Tamar Matsafi
Rony Hizkiyahu Photo: Tamar Matsafi
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