Israel 10-Year Bonds Advance on Concern Greek Crisis to Spread

Israel’s benchmark government bonds rose for the first time in four days as concern the European debt crisis may spread, even after Greece passed the first part of a plan to prevent a default, spurred demand for safer assets.

The yield on the Mimshal Shiklit bond due January 2020, which yesterday climbed the most in two weeks after Greek Prime Minister George Papandreou won a vote on an austerity package, fell two basis points, or 0.02 percentage point, to 5.15 percent at 12:59 p.m. in Tel Aviv. The rate dropped 11 basis points in the second quarter.

“There is a still the risk of the debt crisis in Greece spreading, which is attracting investors to safety,” Yaniv Hevron, head of macro-strategy at Ramat Gan, Israel-based Excellence Nessuah Investment House Ltd., said by telephone.

U.S. government debt headed for a quarterly gain on concern countries such as Ireland and Portugal will struggle to attract investors, increasing demand for the safest securities. Yield shifts on Irish and Portuguese notes suggest investors are starting to anticipate both countries will need to persuade bondholders to reinvest the proceeds of maturing securities in a debt rollover plan similar to that proposed for Greece.

The shekel strengthened 0.4 percent to 3.4148 per dollar, bringing the gain for the quarter to 1.9 percent.

Gas Finds

“There is demand for the local currency as the economy is growing at a relatively strong pace, also supported by a report today on gas reserves,” said Yaron Chechik, a currency trader at Financial Immunities Ltd. in Rehovot, Israel.

Holders of the Sara and Myra exploration licenses off Israel’s Mediterranean coast said a seismic survey indicated the sites may hold about 6.5 trillion cubic feet of natural gas.

The results follow other finds off Israel’s shores since 2009, including the Tamar and Leviathan discoveries that together hold an estimated 25 trillion cubic feet of gas. The finds are sufficient to eventually meet Israel’s domestic needs and enable it to export gas, industry executives and government officials have said.

Israel’s unemployment rate declined to 5.8 percent in April, a record low according to the government, as the economy expanded. Growth in Israel slowed to an annualized 4.8 percent in the first quarter from 7.6 percent in the previous three months, which was the fastest since 2006, the Central Bureau of Statistics said June 23.

To contact the reporter on this story: Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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