Israel Sells $1.5 Billion of 2022 Bonds Abroad to Yield 4.115%

Israel sold $1.5 billion of 10-year bonds in the country’s first overseas offering in three years.

The government issued the bonds due 2022 yesterday to yield 4.115 percent, or 205 basis points more than similar-maturity U.S. Treasuries, said a person familiar with the transaction who declined to be identified because he isn’t allowed to speak publicly.

“Israeli bonds represent a perfect opportunity to invest in a safe haven with some yield,” Agnes Belaisch, a former International Monetary Fund economist who now helps manage $2.5 billion in emerging-market debt funds at Threadneedle Asset Management in London, said in an e-mail.

Israel, which is rated A+ by Standard & Poor’s, the same level as Chile and Slovenia, last sold $1.5 billion of 10-year bonds in February 2009 to yield 262.5 basis points, or 2.625 percentage points above Treasuries, according to data compiled by Bloomberg. The 2019 securities yielded 3.4 percent in New York trading.

Barclays Plc, Goldman Sachs Group Inc and UBS AG arranged the bond sale.

Israel is raising money abroad as part of a strategic plan to “put its name” in international markets once a year or every two years, Senior Deputy Accountant General Eran Heimer said in an interview on Dec. 14. The sales create a benchmark that helps to support Israeli corporate bond offerings in international markets, according to the Finance Ministry’s website.

The Bank of Israel yesterday cut its benchmark interest rate for the third time since the end of September to 2.5 percent, saying that Europe was facing a recession that was hindering the domestic economy. The central bank and the Finance Ministry have reduced their growth predictions for this year, citing the European crisis. Exports make up about 40 percent of the Israeli economy and Europe is one of the country’s largest markets.

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