For the first time since the start of the war on October 7, Israel has completed raising a dollar bond in international markets totaling an overall $8 billion. In recent months, the state has focused on raising debt to finance the war on the domestic market, through private offerings and through Israel Bonds.
Israel has now issued three new bonds: over five years at 5.5% annual interest; over 10 years at 5.6% annual interest; and over 30 years at 6.05% annual interest. The issue margins were 135, 145, and 175 basis points respectively above US government bonds yields for similar periods of time. Demand for the offering reached $38 billion - in other words 4.75 times the amount of the bonds being issued - and the highest ever for a State of Israeli international bond issue.
Demand for the issue was led by first-rate strategic investors such pension funds, insurance companies, hedge funds, and institutions that have been holding Israeli securities for many years. 400 different investors from 36 different countries took part in the debt issue. The offering's underwriters were Deutsche Bank, BNP Paribas, Bank of America, and Goldman Sachs. Prior to the offering, Israel's Accountant General Yali Rothenberg and his team led rounds of extensive meetings in Europe and the US.
Israel's debt has grown since the start of the war and the amount of debt raised by the Ministry of Finance Accountant General has jumped from NIS 1.5-2 billion per week before the war, to NIS 3.5-4 billion per week. Israel is expected to raise more than NIS 200 billion to meet the cost of the war. In the past, the Accountant General has stressed that most of the debt would be raised by the state through the domestic market, but "Bloomberg" estimates that more than $10 billion will be raised worldwide.
Earlier this week, the Accountant General financing unit issued offerings on the local market. The coverage ratio, which indicates the demand for bonds against the amount offered, was four times on average. The debt issues in Israel continue to show the appetite of institutional investors for Israeli government debt, and shows the ability to contain the increase in Israel's debt.
Published by Globes, Israel business news - en.globes.co.il - on March 6, 2024.
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