Mizrahi-Tefahot raises 200 mln shekels in notes

JERUSALEM, Feb 18 (Reuters) - Israel's fourth largest bank Mizrahi-Tefahot said on Wednesday it raised 200 million shekels ($48 million) in deferred capital notes, bringing total debt issued to 600 million shekels the last 10 days.

Mizrahi's (MZTF.TA) offering to institutional investors was in the form of Tier 2 capital and aimed at increasing its ratio of capital to risk components to 12 percent by the end of 2009 as required by the Bank of Israel.

The banks capital adequacy ratio stood at 11.43 percent at the end of September.

Mizrahi sold seven-year notes yielding 4.73 percent, 2.5 percentage points above comparable Israeli government bonds.

Mizrahi said the capital would allow it to expand operations in the credit sector.

The bank raised 400 million shekels on Feb. 8 in a debt offering to institutional investors.

With Israel's economy forecast to contract 0.2 percent in 2009, analysts project poor financial results in most sectors.

Barclays Capital rates Israeli banks as "negative". However, it rates Mizrahi as its only "overweight" among Israeli lenders since it has a more than 30 percent market share of mortgages and just a 10 percent share of commercial and retail banking.

"While investors are inclined to recoil from the mere mention of mortgages and real estate in many geographies, we believe the stable and unchanged conservative lending practices in the Israel mortgage market make this stock increasingly attractive to a wider array of investors," analyst Joseph Wolf said. ($1=4.15 shekels) (Reporting by Steven Scheer; editing by Karen Foster)