NEW YORK, Jan 28 (IFR) - The State of Israel on Monday
raised US$2bn from a dual-tranche bond issue that is expected to
help the government extend the duration of its yield curve and
take advantage of positive investor sentiment.
Israel, rated A1/A+/A, sold US$1 billion of 10.5-year notes
due June 2023 and US$1 billion of 30-year bonds due 2043.
The deal was increased from an initial US$1.5 billion.
The 10.5-year notes priced with a coupon of 3.15% to yield
3.213%, or 125 basis points over comparable Treasuries, 10 basis
points tighter than initial price guidance.
The 30-year priced with a coupon of 4.5% to yield 4.588%, or
145 basis points over Treasuries, also 10 basis points tighter
than initial price talk.
Israel regularly taps the euro and dollar markets.
The sale, led by Barclays, Citigroup and Goldman Sachs, met
with strong demand and garnered a book size of about US$6
billion, according to sources.
At these levels, the Israeli government has paid a modest
new issue concession.
The Israel 4% 2022s were quoted at 108.25-108.75 or a G
spread plus 110bp which meant the 10.5-year at a spread of 125bp
was paying less than 15bp of new issue concession.
Issuing 30-year bonds also showed that Israel, an annual
visitor to global bond markets, saw merit in the actions of the
Emirate of Dubai and Qatar Telecom.
Both those issuers last week successfully issued 30-year
bonds. QTel, rated A2/A/A+, priced US$500m of 4.5% 2043s at 182
basis points over mid-swaps.
Dubai raised US$500 million, issuing 5.25% 30-year bonds.
Thirty-year US dollar bonds are in solid demand so far this
year. One fund manager said there was more demand at that part
of the curve from pension funds, which are overflowing with
liquidity as companies replenished their underfunded pension
Last week, Benjamin Netanyahu was declared to have won a
third term as prime minister of the country but his Likud party
was judged to have returned with a weaker mandate than four
years ago. This mixed victory is expected to ensure more
centrist policies instead of extremist ones.