Published On: Sun, Oct 25th, 2015

Israel Debt Risk Rises Most in 14 Months as Violence Increases

Debt

The deteriorating security situation in Israel and the impact it may have on economic growth has led to the second-biggest surge in credit risk this month among developed nations.

Israel’s credit-default swaps, contracts insuring the nation’s debt against default for five years, have advanced four basis points so far this month, the second-biggest gain after the U.S. among 23 developed countries, to 73 basis points, CMA prices show. The swaps increased five basis points last week, the most since August 2014. Meanwhile the shekel depreciated the most in two months during the same period.

Bloomberg by Sharon Wrobel

 

See the full doc. here:

Debt Developments in the Economy, August–September 2015

Business sector debt increased in August by about NIS 10 billion (1.2 percent), to about NIS 824 billion. Household debt increased by about NIS 4 billion (0.9 percent) to around NIS 455 billion at the end of the month.

The business sector’s outstanding debt

  • In August, business sector debt increased by about NIS 10 billion to around NIS 824 billion. The increase derived mainly from the effect of a 3.9 percent depreciation of the shekel against the dollar, which increased the shekel value of debt indexed to and denominated in foreign currency. In addition, there was net raising of debt through tradable bonds in Israel, nonbank loans, and credit from abroad, which were partially offset as a result of the net repayment of bank debt and non-tradable bonds.

  • In September, the business sector (excluding banks and insurance companies) issued about NIS 3.2 billion in bonds, mostly in tradable bonds. This is higher than the average issuance of the first eight months of the year (NIS 2.4 billion).

 

The cost of the debt

  • In the CPI-indexed track, the spread between the interest rate on new bank credit granted and the interest rate on deposits widened by about 0.34 percentage points in August, compared with the previous month, due to a larger increase in the interest on marginal indexed credit than the increase in interest on marginal indexed deposits.

  • In September, the average spread between the yield on CPI-indexed corporate bonds—measured by the Tel Bond 60—and the yields on CPI-indexed government bonds widened to about 1.64 percentage points.

  • In September, the average interest rate on new unindexed mortgages (variable-rate interest) increased by about 0.02 percentage points. The average interest rate on new CPI-indexed mortgages (fixed interest) also increased, by about 0.08 percentage points.

 

The cost of the debt

  • In the CPI-indexed track, the spread between the interest rate on new bank credit granted and the interest rate on deposits widened by about 0.34 percentage points in August, compared with the previous month, due to a larger increase in the interest on marginal indexed credit than the increase in interest on marginal indexed deposits.

  • In September, the average spread between the yield on CPI-indexed corporate bonds—measured by the Tel Bond 60—and the yields on CPI-indexed government bonds widened to about 1.64 percentage points.

  • In September, the average interest rate on new unindexed mortgages (variable-rate interest) increased by about 0.02 percentage points. The average interest rate on new CPI-indexed mortgages (fixed interest) also increased, by about 0.08 percentage points.

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For links to Data and Statistics on the Bank of Israel website:

http://www.boi.org.il/en/dataandstatistics/pages/default.aspx

http://www.boi.org.il/en/bankingsupervision/data/pages/tables.aspx?chapterid=13

 

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