Israel raises $6 billion in first international bond offer since ceasefire

By Steven Scheer

JERUSALEM, Jan 7 (Reuters) - Israel sold $6 billion of bonds in a three tranche international debt offering, the Finance Ministry said on Wednesday, taking advantage of a positive market environment and Israel's improved fiscal position since the October 10 ceasefire in Gaza.

The ministry said demand totalled $36 billion, reflecting strong confidence among international investors in Tuesday's offering of 5-, 10- and 30-year bonds, with spreads between 90 and 125 basis points over comparable U.S. Treasuries yields.

"This issuance ... reflects the State of Israel's ability to operate successfully even under conditions of uncertainty," said Yali Rothenberg, Israel's Accountant General.

"The size of the issuance supports Israel's financing needs for 2026 and provides significant tailwinds for the local market as well," Rothenberg added in a statement.

Spreads returned to pre-war levels in the offering, which attracted some 300 investors in 30 countries, including those with which Israel has signed the Abraham Accords, showing "the expansion and deepening" of it international investor base".

The Gaza war began in October 2023. While the ceasefire has halted most fighting, it has not stopped entirely and both sides have accused one another of violating the deal's provisions.

About 15% of Israel's financing needs come from annual foreign bond issues, with 85% in the domestic market. It sold $5 billion in bonds in 2025.

In the wake of 2024 downgrades from all three major credit rating agencies, Israel last February sold $2.5 billion of five-year bonds at 120 basis points over comparable U.S. Treasury yields and $2.5 billion of 10-year bonds at 135 bps over. It sold $8 billion in 2024 at as much as 145 bps over Treasuries.

Israel's economy grew by about 2.8% in 2025 and the Bank of Israel projects a 5.2% rise in 2026. S&P in November raised the country's outlook to "stable" from "negative", while Israel's shekel ILS= is at a four-year peak against the dollar.

Rothenberg told Reuters on Tuesday that the time was ripe for an offering given typically strong investor demand in January, along with the fact that spreads have narrowed and easing global inflation has led to lower interest rates.

Bank of America, Citi, Deutsche Bank, Goldman Sachs and JP Morgan were joint lead managers on the offering.