Israel's Ministry of Finance Concludes Massive Bond Issuance Amidst Growing Economic Challenges

In a significant financial move, Israel's Ministry of Finance has successfully completed a giant issuance with a total financial volume of NIS 3.3 billion. The issuance comprised NIS 2 billion in shekel bonds and NIS 1.3 billion in index-linked bonds.

However, looming challenges lie ahead for the Treasury, as it grapples with substantial repayments and a complex economic landscape. By the end of the year, government bonds totaling NIS 12 billion are set to be redeemed, coupled with a coupon payment of NIS 700 million across three series of bonds.

Looking ahead to 2024, the economic forecast remains challenging. Apart from the anticipated war and reconstruction expenses estimated at NIS 150 billion, the Treasury faces the task of refinancing a debt of NIS 95 billion in bonds due for repayment during the year. The same amount needs to be raised to cover these obligations.

This extensive fundraising effort is further compounded by the financial needs arising from government expenditures, coalition agreements, and the rising costs of war and reconstruction. The Treasury must grapple with a deficit ranging from NIS 30-50 billion, necessitating a solution that will inevitably impact the bond market.

The implications of such massive fundraising extend to the corporate debt landscape, with potential increases in financing costs that could weigh on Israel's economic development in the years to come.

Breaking down the recent bond series closures, the yields are as follows: Series 226 concluded at 3.9%, Series 432 at 4.27%, Series 537 at 4.65%, Series 1152 at 4.98%, Series 1131 at 1.9%, Series 1130 (variable rate) at 4.86%, and Series 824 (short-term) at 4.32%.