Israel Benchmark Yield Falls to Record Low on U.S. Economy Woes

Israeli government bonds rose, pushing the yield to the lowest on record, after U.S. employers added fewer jobs than forecast, fueling speculation that the growth rate of the world’s biggest economy is slowing.

The yield on the 4.25 percent notes due March 2023 fell six basis points, or 0.06 percentage point, to 3.80 percent, the lowest since the notes started trading in August, at 2:04 p.m. in Tel Aviv.

Treasury note yields dropped five basis points on April 5 as U.S. employers in March added the fewest workers in nine months and the jobless rate fell to a four-year low, Labor Department data show. The country is Israel’s largest trading partner accounting for $19.3 billion in exports last year, according to the Central Bureau of Statistics.

“The benchmark is tracking its U.S. counterpart,” Shuki Arditi, a bond trader at Tel Aviv-based Leader Capital Markets (LDRC) Ltd., said by phone. “U.S. employment data fueled concern about the recovery of the economy which is a large trading partner for Israel.”

The Bank of Israel has gradually reduced its borrowing rate to 1.75 percent from 3.25 percent in 2011 to shore up the export economy.

One-year interest-rate swaps, an indicator of investor expectations for rates over the period, declined four basis points to 1.59 percent on April 5. The shekel weakened 0.1 percent to 3.6289 a dollar on April 5. The currency strengthened 2.9 percent this year, the third-best performer among 31 currencies tracked by Bloomberg.

The Tel Aviv Bond 40 Index, which measures inflation-linked and fixed-rate corporate bonds, advanced 0.1 percent to 286.50. Space Communication Ltd. (SCC) bonds dropped, as the Israeli satellite services provider considered raising as much as $140 million. The yield on the Tel-Aviv based company’s 185 million shekels ($50.9 million) of 7.5 percent notes due December 2015 rose 15 basis points to 4.99 percent, the highest since Jan. 20.

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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