Israel Sets Record With $8B Bond Sale Amid Ongoing Conflict

In the aftermath of its conflict with Hamas, Israel is making a historic move by issuing an $8 billion international bond. This marks the country’s first public offering since the war.

What Happened: Israel has begun a three-part note offering due in five, 10, and 30 years, which at one point drew in about $25 billion in investor demand. This offering is part of Israel’s plan to strengthen its economy while continuing its fight against Hamas, Bloomberg reported on Tuesday.

This transaction marks Israel’s first in the global public market since the onset of the war and is the largest dollar note sale ever by the country. Even amid the conflict, Israel expects to sell a near-record number of bonds this year, surpassing $10 billion, via a mix of local and global securities.

The shortest-maturity notes in this offering were launched with a yield of about 135 basis points over U.S. Treasuries. Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank, and Goldman Sachs Group are handling the arrangement of the deal.

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“Israel has significant funding needs this year given the war,” Uday Patnaik, head of EM fixed income at Legal & General Investment Mgmt Ltd, stated. "I wouldn't be surprised if they need to issue more," he added.

Notwithstanding a recent downgrade by Moody's Investors Service, Israel’s credit still maintains its investment-grade status.

Why It Matters: Israel’s unprecedented bond sale comes amid ongoing conflict and tension. Just last month, Houthi rebels warned Israel to cease its “aggression” in Gaza, threatening continued attacks on international shipping in the Red Sea. The tension has even elicited unconventional solutions from figures such as Jon Stewart.

However, the conflict’s human toll has been immense, with over 25,000 Palestinian women and children reportedly killed in the Gaza Strip since the conflict began.

Despite the conflict, notable investors like Bill Ackman have shown confidence in Israel’s economy, with Ackman acquiring a 5% stake in the Tel Aviv Stock Exchange.

This bond sale signifies Israel’s determination to bolster its economy amid these challenging circumstances.

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