The Finance Ministry is set to launch a multi-billion bond offering to international investors, aiming to address the nation’s substantial budget deficit.
The move, spearheaded by Accountant General Yahli Rotenberg, comes as the country seeks to leverage favorable market conditions following recent geopolitical shifts.
Rotenberg recently visited London to engage with global investors and promote the upcoming issuance. This will be Israel’s first major international bond sale in 10 months, following a record $8 billion offering on March 5, 2024, intended to finance wartime needs.
That issuance, featuring bonds with terms of 5, 10 and 30 years, drew overwhelming demand of $25 billion, exceeding supply by a wide margin. Interest rates at the time ranged from 5.4% to 5.75%, reflecting strong market confidence in Israel’s creditworthiness despite turbulent conditions.
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International bond offerings have historically been a vital mechanism for Israel to finance deficits, particularly during crises such as the COVID-19 pandemic and wartime periods. These issuances help alleviate pressure on the domestic market and stabilize yields, even amid significant government debt.
Recent geopolitical developments, including the cessation of hostilities along the Lebanese border, the elimination of Hezbollah and Hamas leaders, and deterrent actions against Iran, have reduced Israel’s credit risk. This has narrowed the spread between Israeli bonds and those of other advanced economies, improving conditions for the planned issuance.
Market insiders report rising global investor interest in Israeli bonds, viewing them as carrying reduced risk. International banks and firms are expected to participate in the upcoming auction, which could be initiated in the coming weeks, depending on market conditions.
However, analysts caution that renewed tensions along the northern border or a potential escalation with Iran could delay the issuance. Financial experts believe Israel is likely to move swiftly to preempt any developments that could increase interest rates on its bonds.
Israel’s last record-breaking issuance in March highlights the nation’s ability to attract international trust even during challenging times. This new offering, expected to target billions in dollars or euros, will further test the resilience of Israel’s fiscal strategy in the face of evolving global and regional dynamics.