Israel borrows about 6 billion dollars from international markets

SadaNews - Israel has borrowed about 6 billion dollars from international markets by issuing dollar-denominated sovereign bonds, marking its first borrowing of this kind since the ceasefire in the Gaza Strip about three months ago, according to the Israeli Ministry of Finance.

The Ministry of Finance stated in a statement released today, Wednesday, that the issuance included three tranches of bonds maturing in 5, 10, and 30 years, indicating that the volume of subscription requests reached approximately 36 billion dollars, which is equivalent to six times the actual borrowing amount.

According to official data, the yield on the 30-year bonds was priced at about 6.11%, with a margin of about 125 basis points above similar U.S. Treasury bonds, while the yield margins on the 10-year and 5-year bonds were about 100 and 90 basis points, respectively.

The Ministry of Finance reported that the weighted average margin for the borrowing operation reached about 102 basis points, compared to about 154 basis points in the dollar bond issuance executed by Israel in 2024, in what it described as an "improvement" in financing conditions.

The statement added that the price difference decreased by about 0.3 percentage points from the initial guidance provided by the underwriting banks, against the backdrop of what was termed "high demand" from investment funds around the world.

Bloomberg quoted the accountant at the Ministry of Finance, Yahli Rotenberg, saying that the results of the issuance "reflect the return of yield spreads to pre-war levels," and considered it an indication of "investor confidence in the Israeli economy," according to his expression.

The ministry noted that the borrowing process was preceded by meetings with dozens of investors in the United States, Europe, and Asia, without disclosing details, while investors from about 30 countries participated in the subscription.

Rotenberg mentioned that among the participants were investors from countries that signed normalization agreements with Israel as part of the "Abraham Accords," despite the political tensions prevailing in regional relations against the backdrop of the war in Gaza.

The issuance process was led by banks Bank of America, Citi, Deutsche Bank, Goldman Sachs, and JP Morgan, which acted as lead underwriters for the offering and bond issuance yesterday.

According to the Ministry of Finance, Israel typically issues dollar bonds once a year, with its last international borrowing occurring in February 2025, when it raised 5 billion dollars through bonds maturing in 5 and 10 years, while the 30-year tranche was added in the current issuance in response to what the ministry described as "investor demand."

The ministry stated that this borrowing comes within the framework of covering the financing needs of the 2026 budget approved by Netanyahu's government early last December, amid the ongoing financial burdens of the war and its economic repercussions.

The statement quoted Finance Minister Bezalel Smotrich as saying that the latest borrowing operation in international markets reflects, in his expression, "the resilience of the Israeli economy," and considered that the high demand for the bonds from institutional investors from around the world "reflects good management of economic policy in recent years and indicates market confidence."

He continued that these results, according to him, reflect "the responsible economic management applied by the government." He regarded the borrowing operation as, in his expression, "an important step that supports the continued stable and responsible management of the Israeli economy."

For his part, the Accountant General at the Ministry of Finance, Rotenberg, stated that the results of the bond issuance "reflect a return to yield spread levels that preceded the war." He added that these results "indicate a high level of investor confidence in the Israeli economy."

Rotenberg, in remarks included in the Ministry of Finance's statement, noted that the borrowing volume supports government financing needs for 2026. He pointed out that the operation represents, in his expression, "a positive boost for the domestic market as well."

He added that the results "reflect the resilience of the Israeli economy and its ability to operate successfully even in periods characterized by uncertainty." He noted that about 300 investors from more than 30 countries participated in the issuance process.

He added that among the participants were countries that signed 'Abraham Accords' with Israel, considering that this "indicates the expansion and deepening of the base of international investors."

In turn, Deputy Accountant General Gil Cohen stated that Israel "succeeded in raising debt at the lowest cost in the last two years." He added that this came while continuing to support the strategy for managing government debt.

He pointed out that this strategy is based, according to him, on diversifying funding sources and expanding the base of investors. He considered that this approach is a "key element in responsible debt management," allowing stable financing of government activity even in difficult periods.