dollar-denominated bond offering garnered demand of more than $9 billion from foreign investors and provided the government with its lowest ever funding costs in a dollar bond issue, the Finance Ministry said on Tuesday.
Israel late on Monday sold $2 billion worth of dollar-denominated debt in a dual-tranche deal that took advantage of strong investor appetite as a way to extend the maturities of its obligations.
It sold $1 billion each of 10-1/2-year notes and 30-year bonds in the offering, in which the ministry said it raised the size of the 30-year due to strong demand. Initially, the government planned to sell a total of $1.5 billion.
Israel will pay interest of 3.213% on its notes maturing in June 2023, a record low and just 125 basis points over comparable US Treasuries. It will pay 4.588% for a 2043 bond, 145 basis points over Treasuries.
The offering was Israel's 10th dollar issue, the first 30-year issue in 15 years and the first time a 10 and 30 year bond were sold together, the ministry said.
Citing a vote of confidence in Israel's economy, the ministry said foreigners bought 95% of the bonds, with demand coming from more than 300 different investors in 34countries including the United States, Great Britain, Germany, France, Switzerland and China.
Investors hunting for yields in a historically low-yield environment are grabbing at the chance for investment-grade bonds that offer better returns than US Treasuries.
"We want to diversify and I think that Israel has a very good track record of paying back its debt," Minister of Finance Yuval Steinitz told Reuters in an interview.
The yield on Israel's 10-year dollar bond maturing June 2022 has jumped 14 basis points in the past three sessions.