Israel Credit Risk Rises as Leiderman Withdraws Central Bank Bid

The cost of protecting Israeli bonds against default surged to the highest level in two weeks after Leo Leiderman withdrew his candidacy to become the next Bank of Israel governor, the second nominee to pull out in a week.

Israel’s five-year credit-default swaps rose 0.66 basis points to 111.66, the highest level since July 15, according to prices compiled by CMA. The credit risk is set for a 3.66 basis points increase this week, the biggest since the five days ending June 21. The shekel was little changed at 3.5633 at 11:07 a.m. in New York.

Leiderman, who is head of the economics department at Bank Hapoalim Ltd., said he is removing himself from consideration, according to a text message from Prime Minister Benjamin Netanyahu’s office. Leiderman is the second candidate to withdraw in a week after Jacob Frenkel announced he was no longer in the running. Netanyahu chose Leiderman to succeed Stanley Fischer on July 31.

“It’s going to take a while to settle this now and it’s going to lead to a period of uncertainty,” Daniel Hewitt, senior economist at Barclays Plc in London, said in a telephone interview. “I was really looking forward to him as a governor. I thought he was just the right person for it.”

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