Israel Successfully Raises $3 Billion in US Dollar Bond Issue

Photo Credit: From the Steinfeldt Photography Collection of the Jewish Historical Society of the Upper Midwest.

Israel completed a successful bond issue on Wednesday, selling $3 billion worth of government bonds, despite the government’s large budgetary deficit and prolonged political gridlock.

Israel’s Treasury issued $2 billion worth of 30-year bonds at 3.375%, or 115 basis points more than comparable US Treasury bonds, and an additional $1 billion worth of 10-year bonds at 2.5%, or 68 basis points above the US Treasury’s rates.

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According to a statement by the Ministry of Finance, the bond offering was met with record demand, amounting to approximately $20 billion, almost seven times more than the total bonds offered.

The offering attracted over 400 different investors from nearly 40 countries, including the US, UK and Germany. There was a particularly high demand from Asian institutional investors, including from Japan and Hong Kong.

The list of buyers included central banks, pension funds, insurance companies and several other financial institutions that already hold Israeli securities.

The sale was the 13th US dollar bond issue offered by the Israeli government. The previous US dollar bond issue occurred a year ago, in January 2018.

The offering is part of the Treasury’s General Accountant’s Department’s work plan aimed at “diversifying government debt financing channels, expanding the investor base and building a foreign currency reference curve in global markets.”

Accountant General Rony Hizkiyahu said the successful bond issue shows the confidence of international investors in Israel’s economy.

“The successful bond issuance represents the confidence of the world’s largest investors in the Israeli economy and indicates the high demand for Israeli government bonds. The level of issuance and low cost will constitute an important element in financing the government’s activities in the coming year,” he said.

Senior Deputy Accountant General Gil Cohen added that “the highest ever demand and lowest ever spread in Israel’s issuance is a direct result of the strength of the Israeli economy and professional policy in the management of government debt in recent years.”