for a Total of $1.5 Billion at a Yield of 4.115%
Lowest-Ever Pricing Achieved by the State of Israel in Issues of Dollar Bonds
The Government of Israel completed overnight in New York a successful issue of dollar-denominated bonds. The bonds were issued for a 10.5-year term, at a volume of $1.5 billion and a yield to maturity of 4.115%, reflecting a spread of 205 bps (basis points) above the interest rate on 10-year US treasury bonds.
The bond issue was managed by the Accountant General in the Ministry of Finance, Ms. Michal Abadi-Boiangiu, her deputy, Mr. Eran Heimer, and the Ministry's representative in the United States, Ms. Sigalit Sayag, who together brought the deal to a successful close through its underwriters Barclays, Goldman Sachs and UBS.
Demand for the issue totaled $5.8 billion, nearly four times the amount offered. Initially, the Accountant General had planned to raise $1 billion – however, in view of the strong demand and attractive price it was decided to expand the offering to $1.5 billion.
This was the State of Israel's first issue of dollar-denominated bonds since 2009, and its ninth bond offering in this currency. The successful issue is a benchmark for pricing Israel's economic risk, while its pricing was the lowest ever achieved by the State of Israel in issues of dollar bonds.
Foreign investors demonstrated keen interest, and particularly surprising was the high demand among European countries. The auction closed with 87% of the issue allotted to foreign investors and the remainder to Israeli investors. Orders were received from 307 investors in 22 countries, among them the US, the UK, Italy, Germany, Switzerland, Spain, Portugal, the Netherlands, Luxembourg, Belgium and Austria.
Minister of Finance, Dr. Yuval Steinitz, noted that "the successful offering, at the lowest-ever interest rate for a dollar offering and a four-fold oversubscription, is especially notable against the background of the debt crisis in Europe and shows a clear vote of confidence in the Israeli economy."
The Accountant General in the Ministry of Finance, Ms. Michal Abadi-Boiangiu, added that "the large volume of orders placed by foreign institutions for Israeli government bonds is evidence of the attractiveness of the Israeli market to investors and the Israeli government's ability to access international capital markets."
