Israel to issue first-ever 100-year bonds to help fund virus rescue package

Finance Ministry to sell $5 billion in debt to international investors to pay for NIS 80 billion plan as businesses falter, unemployment skyrockets

Luke Tress is an editor and a reporter in New York for The Times of Israel.

A guard at the shuttered Mahane Yehuda market in Jerusalem, March 29, 2020. (Nati Shohat/Flash90)
A guard at the shuttered Mahane Yehuda market in Jerusalem, March 29, 2020. (Nati Shohat/Flash90)

Israel will issue its first-ever 100-year bonds to help pay for a massive stimulus plan that aims to mitigate economic damage caused by the coronavirus pandemic.

Accountant General Rony Hizkiyahu decided to issue 10, 30 and 100-year state dollar bonds to raise debt in international markets, the Finance Ministry said Tuesday.

The $5 billion bond offering is the largest in Israel’s history. The 100-year bonds sold will amount to $1 billion, $2 billion will be sold in 10-year bonds, and another $2 billion in 30-year bonds.

The government is in need of funding to pay for the NIS 80 billion ($22.5 billion) economic rescue plan, and will see losses in tax revenue in the coming months due to the staggering economic toll exacted by the pandemic.

The decision to issue the bonds was made after consultations with foreign financial organizations, and with the understanding that there is significant interest from large international investors for Israel’s state debt, the Finance Ministry said.

The banks that are underwriting the offering are Barclays, Citibank, BofA Securities and Goldman Sachs.

The state most recently issued dollar bonds in January, selling 10 and 30-year bonds for a total of $3 billion. Euro bonds were last issued in January 2019, raising 2.5 billion euros in 10 and 30-year bonds.

The Moody’s credit rating agency ranks Israel as A1 stable, S&P ranks it as AA- stable, and Fitch ranks it as A+ stable.

Finance Minister Moshe Kahlon on Monday announced the economic rescue package, the largest in Israeli history, saying he believes that economic activity will gradually resume after next month’s Passover holiday.

The plan came as Prime Minister Benjamin Netanyahu announced updated emergency regulations, which call for paring economic activity in Israel to just 15% of normal levels, down from the current 30%, forcing more workers to remain at home.

The unemployment rate climbed to 23.4 percent on Tuesday with over 800,000 Israelis put out of work in March due to the coronavirus pandemic.

The staggering figure amounts to nearly one quarter of Israel’s workforce.

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