Gov't bond issue in London vastly oversubscribed

The Ministry of Finance has achieved an unprecedented success in an issue of government bonds in London. Sources inform ''Globes'' that the issue of the euro-denominated bonds was 5.7-fold oversubscribed, the highest ever demand for an issue of Israeli government bonds.

The Finance Ministry issued a 10-year �1.5 billion bond with a yield of 2.932%.

In 2009, the Ministry of Finance raised $1.5 billion in bonds in an issue that saw $8 billion in demand, 5.3 times the original offering. That issue was considered a great success at the time.

Accountant General Michal Abadi-Boiangiu and her deputy, Yaheli Rotenberg, are in London for the euro offering, four years after the last euro offering by the government.

Part of the current issue's success is due to Israel's attractiveness, but also because of the low interest rates in international markets and the fact that the market is hot. However, Israel's fiscal figures should not be denigrated, as they have greatly improved in the past year: the government deficit has fallen to 3.15% of GDP; and the debt-to-GDP ratio has fallen to a historic low of 68%, well below the ratios in most Eastern and Southern European countries.

Abadi-Boiangiu now faces a dilemma: respond to the demand and increase the issue, or stick with the original issue and try to get better terms. When her predecessor, Shuki Oren, raised �1.5 billion in March 2010, he doubled the original offering of �750 million in response to strong demand.

Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2014