Israel Issues New Bonds as Ceasefire Brings Economic Relief

Israel has returned to the global bond market, launching a new dollar-denominated bond sale on Tuesday. This move aims to strengthen the country’s financial stability after over 16 months of war.

Ad

The government is offering two sets of bonds—one maturing in five years and another in ten years. Initial yields are expected to be around 150 basis points above US Treasuries for the five-year bonds and 165 basis points for the ten-year ones. Each tranche is likely to be at least $500 million, though the final size and pricing will be decided later in the day, according to sources familiar with the deal.

This marks Israel’s first dollar bond sale since March 2024, when it raised a record $8 billion. Typically, the country sells such bonds only once or twice a year. However, due to the economic strain caused by ongoing conflicts, Israel has significantly increased its reliance on borrowing.

Advertisement

Since October 2023, Israel’s war against Iran-backed militias has widened its fiscal deficit, prompting record bond issuances in both international and domestic markets. However, recent ceasefires with Hamas and Hezbollah, in place since November, have started to ease economic pressure. According to the finance ministry, Israel’s 12-month trailing budget deficit improved from 6.9% of GDP in December to 5.8% in January.

The bond issuance is being managed by major global banks, including Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs, and JPMorgan Chase. Experts believe this move will help Israel stabilize its finances as it navigates the economic challenges brought on by prolonged conflict.

This latest bond sale signals Israel’s efforts to regain financial balance while working towards long-term economic recovery.

Also Read: Israel Approves Six Bitcoin Mutual Funds Launching December 31