Israel raises €1.5b at minimal rates

Europe
Europe

The issue of short term euro-denominated bonds is at interest rates of 0-0.4%.

Last week, the State of Israel raised €1.5 billion in an issue of short-term bonds. The issue consisted of €600 million for two years at zero interest, and two four-year bonds, of €500 million and €400 million, at annual interest rates of four basis points (0.04%) and one basis point (0.01%). Israel's high credit rating, the low global interest rate environment, and the fact that the bonds have short durations, explain the interest rate levels.

In the past, Israel would raise debt internationally once a year in January. The amount of debt raised has been expanded since the beginning of the coronavirus pandemic, but the Ministry of Finance has not released details of every offering it has carried out. At the beginning of the coronavirus crisis, the ministry came in for criticism for raising debt at rates that were considered high, for example a 100-year bond at annual interest of over 4%. By the end of the year, the amount raised by the Accountant General in Israel and overseas is expected to reach NIS 250 billion, which compares with NIS 120 billion in 2019.

The underwriters for the current issue were Bank of America, Barclays, Goldman Sachs, and Citi.

Gil Cohen, director, director of Global Debt Capital Markets at the Ministry of Finance, said, "The Accountant General Division is using a range of tools to finance the high deficit that has resulted from the coronavirus crisis and the sharp decline in the raising of designated bonds from the pension funds. The global market represents an important, complementary tool to the main financing tool, which is issues in the Israeli market."

Published by Globes, Israel business news - en.globes.co.il - on October 8, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

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