Gateway to Israel logo370.
(photo credit: Courtesy)
The volatility of stock markets in the years of the global economic crisis have
brought renewed interest in bonds, which are thought of as safer but lower yield
Ilan Buchbut, who heads Bank Hapoalim’s fixed-income desk,
gave The Jerusalem Post 10 facts worth knowing about Israel’s thriving bond
market: 1) Bond trading represents 81 percent of market trade. Forty-five series
of government bonds (including Treasury bills) are traded on Israel’s bond
market, comprising a market value of NIS 600 billion, while 737 different series
of corporate bonds are worth NIS 277b.
2) Government bonds represent the
bulk of trade, with a daily turnover of NIS 4.5b., versus NIS 770 million for
3) Bonds are differentiated on the basis of whether they
are denominated at a fixed or floating rate, and they are linked to a
4) Among government bonds, there is a greater
proportion of fixed-rate, shekel-denominated bonds. Among corporate bonds, there
are more foreign-currency, index-linked bonds.
5) In the first 10 months
of 2013, the government issued NIS 56.5b.
of bonds, 72% of which were
shekel-denominated, and the rest were linked to the consumer-price
6) In the first 10 months of 2013, 128 corporate bonds were issued
for a total value of NIS 26.2b., about half of which were new series and the
7) In the first nine months of 2013, foreign investors
collected $2.5b. more from government bonds than they invested.
Government bond yields are at historically low levels, mainly due to the low
interest-rate environment and low inflation expectations.
yields are also historically low, as is the spread between the two.
Since the beginning of 2013, government-bond indices increased moderately at a
rate of about 3.0%, compared with a rise of about 5.5% in the corporate-bond
10) The primary factor affecting the local bond market today is
volatility from the US bond market.
This article was produced in
conjunction with Bank Hapoalim.