Israel gearing up for large international bond sale, officials say

By Steven Scheer

TEL AVIV, Jan 9 (Reuters) - Israel is planning a large international bond issue in dollars or euros in the coming months, two senior government officials said on Thursday.

Israel's accountant general and his deputy were in London this week for meetings with investors, following recent meetings in New York, Washington and Philadelphia, in a "road show" to gauge investor interest ahead of the debt offering that could reach billions of dollars.

Last March, despite a war following the attacks by Palestinian militant group Hamas on Oct. 7, 2023 that sharply raised the state's needs to finance the conflict, Israel sold a record $8 billion of 10 and 30 year bonds in demand that reached nearly $40 billion.

"We don't know yet how much we're going to raise in the issues, but it's going to be less than last year," one official told Reuters, citing lower financing needs in 2025.

He noted that whether the issue would be in dollars or euros depended on market conditions, although the Finance Ministry in the past had preferred to alternate between the two each year.

"We always go out for a road show before we issue," the official said, doubting that the offering was imminent. "We are still not decided yet."

Israel typically taps international markets early in the year. The official said the government aims to finance up to 20% of its funding needs with foreign issues that include private placements, and 80% through the local bond market.

He said that despite anti-Israel sentiment globally due to Israel's ongoing military conflicts in the region, demand for Israeli debt was expected to be strong as usual - even as all three rating agencies lowered Israel's credit rating in 2024.

"We're getting a really good vibe from investors. They're really looking to see us in the market," he said. "Last year we did an awesome issue in March, so we got a lot of good feedback, and now the conditions are even better, I think, from last year."

"We are feeling good and we are going to be opportunistic about the timing," he added. "We are looking for the right time. We are not set for something specific right now and we will see where it goes."

Israel's 10-year yield traded in Tel Aviv was at 4.46% versus comparable U.S. Treasuries of 4.66%. Both 30-year yields were about 4.88%.

(Reporting by Steven Scheer
Editing by Bernadette Baum)

((steven.scheer@thomsonreuters.com; +972 2 632 2210; Reuters Messaging: Twitter: @StevenMScheer))