Bucking boycotts, Israel Bonds sells record $3b since start of Hamas war
US states and local governments continue to buy more, leading to sales of $1.3 billion despite growing anti-Israel protests amid the fighting
Sharon Wrobel is a tech reporter for The Times of Israel.
A record of almost $3 billion was sold in State of Israel bonds in the more than six months since the outbreak of the war with the Hamas terror group as foreign investors, mainly from the US, stepped up their support.
“Since the outbreak of the war on Oct. 7, we have seen a significant increase in the investments by financial institutions mainly from US states and municipal governments,” Dani Naveh, president and CEO of Israel Bonds, told The Times of Israel. “It’s a great reflection first of all of the level of direct support for Israel during the war that many cities and individuals around the world demonstrate.”
“By buying Israel Bonds, they are helping to raise the funds needed for the war effort such as rebuilding destroyed communities, and as investors they are becoming part of the Israeli economy, its resilience and success story, whether in air defense technology or other innovation,” said Naveh.
Israel Bonds, which is registered in the US as The Development Corporation for Israel and affiliated with Israel’s Finance Ministry, issues debt securities by the government of Israel. The majority of operations and investors are in the US, with some located in Canada, Europe, and Mexico.
Within the first month of the war, Israel Bonds raised $1 billion from the sale of the debt securities — the average annual total sales it recorded in previous years. That pushed worldwide investments by Israel supporters in the bonds to $2.7 billion in 2023, a record total in the organization’s 72-year history. To date, it has sold about $52 billion worth of Israel Bonds.
Israel has poured billions of shekels into financing the war that erupted on October 7 when Hamas led a devastating cross-border assault on Israel. The terrorists killed nearly 1,200 people and abducted 253 into the Gaza Strip. Israel responded with a military campaign to eradicate Hamas and free the hostages, of whom about half remain in captivity.
Over the weekend, the Israeli army and allied forces intercepted 99% of the 300 attack drones and missiles fired by Iran at Israel in the first-ever direct attack on Israel by the Islamic Republic.
“Since Oct. 7, the financial requirements of the State of Israel to support the war effort, on the civilian and military front, are much higher,” said Naveh, citing rehabilitation of the kibbutzim that were destroyed in the terror onslaught along with defense spending.
Domestic political pressure over Israel’s conduct in its military campaign in Gaza has prompted some countries to enact financial measures. Ireland pulled investments from Israel’s largest banks and a supermarket chain. Turkey levied restrictions on its exports to Israel.
“There are BDS protests, antisemitic and pro-Palestinian groups acting against Israel bonds and our investors and despite their efforts to intimidate our individual investors and going after our local government investors, our results are better than ever,” said Naveh. “Different kind of investors told us that the way that they are going to address that kind of complaint against them is by additional investments into Israel bonds.”
In March, Palm Beach County in Florida raised the cap on investments in Israel Bonds from 10 percent to 15% of its fund portfolio. With about $700 million of its $4.67 billion portfolio, Palm Beach is the world’s largest holder of Israel Bonds, according to Palm Beach County Clerk and Comptroller Joseph Abruzzo.
“My first duty to the taxpayers of Palm Beach County is to make sure that our tax dollars are protected and invested correctly and wisely,” Abruzzo said. “Israel Bonds are paying a higher rate than our U.S. Treasuries and are just as safe.”
According to Abruzzo, the county will earn about $83 million in interest off its investments in Israel Bonds.
Naveh said that Israel Bonds continued to sell at a fast pace in the first three months of this year, with sales reaching $1.3 billion.
Out of the total money raised from Israel Bonds since Oct. 7, more than $1.7 billion came from 35 US states and local municipalities. Among the institutional buyers were state governments in Florida, New York, Alabama, Arizona, Ohio, Illinois, Texas, Oklahoma, Nevada, Louisiana, South Carolina, and Indiana. The two banks that made purchases were New Jersey-based Cross River Bank and Cleveland-based Key Bank.
The second type of buyers are retail investors from within Jewish communities, congregations, and federations, who are purchasing Israel Bonds to express their support for Israel and make the world a safer and more secure place, said Naveh.
Asked about the prospect for annual sales this year, Naveh could not disclose details about the organization’s 2024 goal.
“We are definitely not going back to the days of $1 billion of annual sales and it will be closer to a company of some $2 billion by the end of the day,” Naveh estimated. “How much exactly we can’t tell at this stage, but we are going to continue to move full steam ahead for much better results.”
Israel’s war with Hamas has already led to a doubling of the country’s borrowing last year, the Finance Ministry said this month. The government raised NIS 160 billion ($42 billion) in debt in 2023 – half of it, NIS 81 billion, after October 7.
Of the total, the government raised 72% domestically, with 25% borrowed overseas and the rest in local non-tradable debt. Israel Bonds account for roughly 25% of the country’s issuance in foreign debt. Israel raised NIS 63 billion in all of 2022.
Last month, Israel raised a record $8 billion in its first international bond sale since the Oct. 7 Hamas onslaught, with very high demand even after Moody’s gave Israel its first-ever sovereign credit rating downgrade in February.
“Throughout the last 73 years, even when the Israeli economy was much more fragile, the debt-to-GDP ratio was much, much higher than today’s, Israel always paid its debt on time,” said Naveh. “If you take a look at previous security rounds that Israel has faced throughout the years, the Israeli economy always demonstrated very strong resilience and I’m optimistic that this case will be the same.”
