Israel successfully completed an issuing of $2 billion in “Green Bonds” which are issued for the funding of projects that deal with climate change. In doing so, the State of Israel joins 24 countries in the world that have issued similar bonds. The 10-year US Dollar-denominated green bonds sold at a margin of 95 basis points above the US government bond yield for a similar term.
Israel’s government described the sale of the green bonds (not called that because USD are green) as a “historic milestone” in its activities to achieve the climate goals set to reduce emissions created from government related activities.
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“Now Israel is part of a distinguished list of countries in the world that issued green bonds,” said the Ministry of Finance.
A green bond – called green because it helps with improving the environment – enables investors in the capital market to be connected to a government’s sustainability and environmental goals and to help promote these goals. These green bonds were issued following the publication of the green framework document, which was drafted in accordance with accepted international principles. The green framework mapped government projects that make a significant contribution to the environmental goals of the State of Israel, similar to the criteria specified in the European taxonomy and the draft Israeli taxonomy. In a financial context, a taxonomy is a document that classifies economic activities according to their impact on the environment, according to clear and measurable technical criteria.
And Israel has been taking a number of steps recently to do its part to fight climate change. In addition to moves to use only zero-emission vehicles in the near future, in December it was announced that an agreement had been signed between Israel and Turkey to construct the world’s largest-ever wave power plant to be built by the Israeli company Eco Wave Power (EWP) in the Turkish port of Ordu on the Black Sea coast.
Also, earlier this month Bar-Ilan University and the Technion – Israel Institute of Technology won a call published by Israel’s Ministry of Energy for the establishment of a national research institute in the field of energy storage. The aim of the institute is to encourage Israel’s energy sector to take a leap forward in response to national strategic challenges, with an eye toward global applications, as well as to train cadres of future experts in the field and facilitate the transfer of innovative technologies from the academic environment to industry.
On the green bonds, Israel’s Minister of Finance, Bezalel Smotrich said, “The execution of the IPO strengthens the actions taken by the government to promote the State of Israel and the welfare of its citizens. The broad participation of the world’s largest entities in the IPO shows the great confidence of investors in the State of Israel and the solidity of the Israeli economy and obliges us to continue with a responsible policy that will advance Israel’s economy Go ahead. With God’s help, we will continue to work to promote Israel’s economy and preserve ties with international investors.”
Prior to the IPO, an extensive round of meetings was held by the Finance Division team in the Accountant General’s Division led by Gil Cohen, Senior Deputy to the Accountant General, with foreign investors in Europe and the USA. The demand for the IPO amounted to approximately 12 billion dollars, 6 times the amount issued. The impressive demand was also made possible by the presence of high-quality strategic investors such as central banks, pension funds, insurance companies and entities that hold the papers of the State of Israel over time. More than 200 different investors from about 35 countries took part in the offering, including the USA, Great Britain, Germany, the United Arab Emirates and more. Among other things, there was a lot of demand among Asian institutional investors from Japan, Korea and other countries. The banks chosen to act as underwriters in the process are: Barclays, BNP Paribas, BofA Securities and Citi.
