Israel’s Accountant General Rony Hizkiyahu has completed raising a €2.5 billion bond in London, of which €1.25 billion is to be repaid over 10 years and €1.25 billion is to be repaid over 30 years. The bond offering enjoyed record demand of €15 billion. Israel’s Ministry of Finance said that the bond had been issued with the lowest margins ever above the euro’s benchmark interest rate, reflecting investor confidence in Israel’s economy.
The 10-year bond is at a 1.5% interest rate and the 30-year bond is at 2.5%. The Ministry of Finance said that this was the first ever 30-year euro bond that it has issued and was one of the few such bonds ever issued for a country outside of Europe. The bonds were issued at margins of 1.15% and 0.75% basis points above the mid-swap benchmark interest rate for similar terms. The underwriters for the issue were Barclays, BNP Paribas and Goldman Sachs.
The bonds were issued after senior Ministry of Finance officials conducted a road show for foreign investors in London, Paris, Frankfurt and Munich.
The Ministry of Finance noted that demand was six times the amount of the bond issued enabling officials to extend the terms of the Israeli government’s debt which reducing risk and recycling. Some 300 investors participated in the bond issue, mostly banks and institutional investors from 30 countries including the UK, Germany and France.
This is Israel’s seventh euro bond issue and is part of the Accountant General’s work plan to diversify sources of financing of Israel’s national debt. The last capital raised by the Israeli government by issuing a euro bond was in January 2017.
Minister of Finance Moshe Kahlon said, “Israel’s economy is going through excellent years of high growth, full employment and low debt-GDP ratio. This successful offering is a vote of confidence by international financial bodies in the Israeli economy and additional proof of international recognition of Israel’s responsible economic management. I congratulate the Accountant General and his team on this success and I am certain that there are many more successes ahead of us.”
Hizkiyahu said, “The success of the offering as expressed by the high volume of demand and low margins stems from Israel’s economic soundness, which resulted in the raising of Israel’s credit rating last summer. The long-term of the bond – the 10-year series and the 30-year, issued for the first time in euros, are a testimony to foreign investor confidence in the Israeli economy.”
Published by Globes, Israel business news – en.globes.co.il – on January 10, 2019
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