Tel-Aviv stock market Launches 6 New Tel-Bond Indices

the board of directors of the Tel-Aviv Stock Exchange (TASE) has approved the launch of four new rating-based corporate bond indices and the launch of two new sector-based corporate bond indices – the Tel Bond-Shekel Banks & Insurance Index and the Tel-Bond CPI Linked Real Estate Index.

Following the launch of the new indices, TASE will calculate total of 28 Tel-Bond indices, 16 of which have been launched in 2017 and 6 more indices will be launched in Feb. Overall, it was decided to launch a record number of 7 new indices since the beginning of the year.

The specifications of the four new indices are as follows:

• "Tel-Bond CPI Linked A” Index – This index will include bond series, which are included in the Tel-Bond CPI Linked Index, and which have been given a Midroog rating in a ratings range of between (A3) and (A1) or which have been given a Maalot rating in a ratings range of between (A-) and (A+).
• "Tel-Bond CPI Linked AA-AAA” Index – This index will include bond series, which are included in the Tel-Bond CPI Linked Index, and which have been given a minimum Midroog rating of (Aa3) or which have been given a minimum Maalot rating of (AA-).
• "Tel-Bond Shekel A” Index – This index will include bond series, which are included in the Tel-Bond Shekel Index, and which have been given a Midroog rating in a ratings range of between (A3) and (A1) or which have been given a Maalot rating in a ratings range of between (A-) and (A+).
• "Tel-Bond Shekel AA-AAA” Index – This index will include bond series, which are included in the Tel-Bond Shekel Index, and which have been given a minimum Midroog rating of (Aa3) or which have been given a minimum Maalot rating of (AA-).

The new indices will complement the diversity of Tel-Bond indices, with higher ratings segmentation, which will enable investors to segment their portfolios according to risk level. Market participants anticipate strong demand for these indices as they are viewed as “classic, mainstream indices”.

In February 2013, TASE launched the Tel Bond-Yields Index, in which are included CPI-linked bonds, with low ratings segmentation between (BBB-) and (A). In November 2015, TASE launched the Tel Bond-Yield Shekel Index, in which are included Shekel bonds, with a rating segmentation identical to that of the Tel Bond-Yields Index. The scope of the investments in instruments that track the Tel Bond-Yields Index and the Tel Bond-Yield Shekel Index is NIS 1.7 billion and NIS 0.7 billion, respectively.

The specification of the two new indices are as follows:

• "Tel Bond-Shekel Banks & Insurance” Index – This index will include bond series of banks and insurance companies, which are included in the Tel-Bond Shekel Index.
• “Tel Bond-CPI Linked Real Estate” Index – This index will include bond series of real estate companies, which are included in the Tel-Bond CPI Linked Index. These indices complement the Tel Bond-CPI Linked Banks Index and the Tel Bond-Global Index (which is characterized by shekel bonds of companies in the real estate sector).

The series of Tel-Bond sectoral indices, which will consist of 3-4 indices, will give investors exposure to debt issued in the real estate sector and in the banking and insurance sectors. Some 70% of the bond series included in the Tel-bond indices have been issued by companies in the real estate, banking and insurance sectors. Talks with market participants have revealed that, in the case of investing in bond portfolios, they perceive a high correlation between banks and insurance companies – particularly from the aspect of regulatory oversight, which is becoming more stringent in relation to the management of the financial risks in these two sectors. In light of this, the solution being proposed by TASE will provide greater diversity among the issuers in the index.

Data regarding the breakdown of the series (as of 26.10.17) are as follows:

Date for the launch of the indices:

The new indices will be launched on February 25th with the record date for the purpose of determining the composition of the indices having been set for 11 February, 2018.

• The characteristics and data relating to the indices are set forth in the appendix to this notice.
• A detailed simulation of the components of the new indices is attached in separate files.