Israel is considering selling its first euro-denominated bonds since 2010, following Poland, Slovakia and Ireland in taking advantage of historically low yields as the Federal Reserve begins tapering stimulus.
The government hired Barclays Plc, Citigroup Inc. and Goldman Sachs Group Inc. to arrange the transaction, according to a person familiar with the situation, who asked not to be identified because the information isn’t public. The sale may take place in the next few weeks, according to the person.
Nations are being drawn by low yields before the Fed further reduces its $85 billion monthly bond-purchase program after deciding to trim its buying by $10 billion at its most recent meeting Dec. 18. Israeli two-year yields were 1.25 percent today compared with a 10-year average of 3.44 percent. Poland sold 2 billion euros ($2.7 billion) of 2024 bonds yesterday, Ireland issued 3.75 billion euros of 10-year bonds Jan. 7 and Slovakia is selling 15-year euro securities today.
“For European-based investors, it has a nice diversification element,” Michael J Roche, an emerging-market strategist at Seaport Group LLC, said in a telephone interview from New York yesterday. “It has the faster growth of an emerging market, offers extra yield and it is an improving credit.”
The yield on Israel’s euro-denominated bonds maturing in 2020 was little changed at 2.06 percent at 5:42 p.m. in Tel Aviv. The country sold the debt on March 2010 to yield 4.7 percent. The yield on the country’s euro-denominated bonds due in 2015 rose for the first time in six days, advancing one basis point, or 0.01 percentage point to 0.91 percent.
Israel last tapped international bond markets 12 months ago, when it issued $2 billion of 10- and 30-year paper. The country is rated A+ by Standard & Poor’s, the fifth highest investment grade, and equivalent A1 by Moody’s Investors Service.
Shlomi Bidani, a spokesman for Barclays in Israel, and a public relations representative for Goldman Sachs who couldn’t be identified because of company policy, yesterday declined to comment when contacted by Bloomberg. Calls made to Citigroup and an e-mail sent to the Finance Ministry seeking comment weren’t returned.
Corporate issuers have also been selling Eurobonds, defined as securities sold in a currency other than that of the issuer. Petroleo Brasileiro SA (PETR4), Brazil’s state-run oil company, issued 3.1 billion euros of notes Jan. 7 in the company’s biggest offering in that currency.
To contact the editor responsible for this story: Brendan Walsh at firstname.lastname@example.org