Development Corporation for Israel/Israel Bonds, first launched in 1951, ranks among Israel’s most valued economic and strategic resources, with a record of proven success.
Praised for dependability and cost-effectiveness, the Bonds organization has helped build every sector of Israel’s economy.
Investment in Israel through the sale of Israel bonds is global in scope, with worldwide sales rapidly approaching $40 billion.
Proceeds from the sale of Israel bonds have played a decisive role in Israel’s rapid evolution into a groundbreaking, global leader in high-tech, greentech and biotech.
Israel benefits from “an active diaspora Bond program in the event of market disruption.”
- Fitch Ratings Agency, May 2016
What is Development Company for Israel/Israel Bonds?
- Development Company for Israel (International) Ltd. is authorised and regulated by the Financial Conduct Authority (“FCA”) and arranges transactionsof securities - Israel bonds– issued by the State of Israel. Development Company for Israel (International) Ltd. is part of a global enterprise that includesDevelopment Corporation for Israel (U.S.) and Canada-Israel Securities, Ltd.. Worldwide Israel bond sales since the first Israel bonds were issued in 1951 are approaching $40 billion.
What does the Bonds organization mean to Israel?
For Israel, having the support of Israel Bonds - a reliable and independent financial pipeline - is an invaluable and strategic national resource, especially since Bonds clients have proven time and again that when Israel is in the midst of a crisis, they do not walk away. Fitch Ratings confirmed this in an opinion issued in May 2016, in which the agency noted that Israel benefits from “an active diaspora bond program . . . in the event of market disruption.” By highlighting Israel Bonds, Fitch recognizes that the diaspora can be a unified force for Israel.
Are Israel bonds reliable investments?
- At a time of continued volatility in financial markets, Israel bonds are widely recognised as reliable investments. Diverse investors value Israel’s impeccable record of having never defaulted on payment of principal or interest on Israel bonds.Global sales consistently exceedingUS $1 billion in each of the past 4 years underscore widespread acceptance of Israel bonds as important additions to investment portfolios, dispelling, once and for all, outdated misconceptions of Israel bonds as "charity."
Who invests in Israel bonds?
- Retail clients – individuals and Jewish organizations – comprise approximately 75% of worldwide sales. The remaining 25% encompasses institutional investors.
How valuable is the Israel Bonds client base?
- Throughout the years, Israel Bonds has successfully developed a sizeable, diverse client base even the largest financial services companies would envy.
How strong is Israel’s economy, given the fact that the global economy continues to be unstable?
- Israel’s economy is dynamic, full of innovative spirit and groundbreaking entrepreneurship, and currently well-positioned to outpacemost other developed nations, particularly with the multi-billiondollar revenue stream soon to begenerated through its massive natural gas fields. Investing in Israel bonds is a means of becoming a stakeholder in one of the world’s most resilient economies.
How have Israel bond sales impacted on Israel’s development?
- Proceeds from the sale of bonds have played a decisive role in Israel’s rapid evolution into a groundbreaking, globally emulated leader in high-tech, cleantech and biotech. Capital from the sale of Israel bonds has helped strengthen every aspect of Israel’s economy, enabling national infrastructure development. Today, expanded ports and transportation networks enabled by investments in Israel bonds help facilitate shipment of ‘Made in Israel’ technology around the world, enhancing national export growth.
Are Israel bonds necessary under normal economic conditions?
- Israel’s Treasury endeavors not to raise funds more than once a year in order to maintain fiscal credibility with financial markets and ratings agencies. When the Treasury does issue bonds in overseas public markets, they are usually long bonds with 10-year maturities. Securities offered by the Bonds organizations complement Treasury-issued bonds by including short and medium-term maturities that are sold on a daily basis.
Are Israel bonds bought in large numbers only when Israel faces a crisis?
- Consistently surpassing US $1billion in global sales in each of the past 4 years counters perceptions that Israel bonds are bought in great numbers only when Israel confronts a national emergency. This is attributable to recognition of the investment value of Israel bonds, and, especially, confidence in the Israeli economy. This also highlights the success theBonds operation has had in shifting the narrative from the geopolitical to the economic.
If there were a crisis, could Israel turn to capital markets?
- While Israel successfully utilizes public markets for debt financing, it almost certainly would not be able to rely solely on these markets in times of economic or security challenge. Under either of those circumstances, it is more than likely Israel’s credit rating would drop, and, as a result, the cost of financing through capital markets could become prohibitively expensive.
Can Israel rely on commercial bank financing in times of economic or security challenges?
- Were Israel not to have access to the Israel Bonds client base and urgently need to re-establish it, the cost of securing necessary interim credit lines from commercial banks would be substantial. Regional conflict could also lead to credit lines not being extended to Israel.
If Israel Bonds did not exist, could Israel quickly create a similar capital-raising,
operation during a national emergency?
- Attempting to create the Bonds sales and management team during a national emergency would take at least 18 months due to financial industry regulations and required examinations. Obviously, the idea of Israel trying to withstand an economic and security crisis for 18 months is inconceivable.
Could another brokerage firm secure capital as effectively as the Bonds organization?
- Were a crisis to erupt, it is unlikely another brokerage firm would be able to secure capital from the Jewish community - and other sources of support - as efficiently as the Bonds organization. Additionally, Israel Bonds has the advantage of its volunteer lay leadership, which, through extensive networking and valuable introductions, helps facilitate numerous accomplishments.
Is the Bonds organization cost-effective?
- Operational costs of the worldwide Israel Bonds enterprise - just over 2.8 % of bonds sold - compare favorably when measured against similar-sized brokerage firms. Moreover, securities offered by Israel Bonds take advantage of current low interest rates, a major benefit to Israel’s economy. The 2, 3, 5 and 10-year securities currently offered by Israel Bonds average out to a duration of approximately 4.5 years, and an average interest rate of approximately 2.0 %.
What message does an Israel bond investment send to BDS (Boycott/Divest/Sanction) advocates?
- Knowing Israel will never be defeated on the battlefield, BDS supporters employ confrontational economic tactics on a wide variety of fronts. Each and every Israel bond investment has the added value of sending an unmistakable message to BDS advocates: Israel’s economy will remain strong.