'Israel' borrowed $6bln via private investors to fund war on Gaza
Dani Naveh, chief executive of "Israel Bonds", says that most of the investment was derived from the US and Europe.
Since October 7, $6 billion has been borrowed by “Israel” through international debt investors, which included $5.1 billion across three new bond issues and six top-ups of existing dollar-euro-denominated bonds, and more than $1 billion of fundraising through a US firm.
According to investors, they were issued in so-called private placements, during which securities are not provided to the public market but to select investors instead. The choice for private placement could be to increase funds for the war quickly or without garnering unwanted attention.
Of two dollar bonds issued this month, “Israel” is paying coupons of 6.25% and 6.5% on bonds maturing in 4 and 8 years, which are much higher than benchmark US Treasury yields ranging between 4.5% and 4.7%, arranged by Goldman Sachs and Bank of America respectively when the bonds were issued.
Meanwhile, some debt investors were adamant about lending to “Israel” after October 7 and some remained reserved given the humanitarian catastrophe “Israel” has caused in Gaza as a result of its war.
It is significant to note that Galit Altstein wrote for Bloomberg News that the ongoing war on Gaza is causing the Israeli economy significant losses, estimated at about $260 million daily.
Thys Louw, emerging market debt portfolio manager at fund manager Ninety One, explains, “The reality is that, for a lot of investors, Israel at the moment carries too much ESG [environmental, social and governance] risk, especially for some emerging market investors where Israel is off benchmark.”
An unnamed strategist at one of the world’s biggest investment banks who requested to be unidentified given the topic's sensitive nature, clarified, “The market is still pricing a very high premium on Israel’s international debt, given that the war is ongoing,” noting, “In particular, the market is worried about how the war is going to impact Israel’s growth and public debt levels, and subsequent sovereign ratings.”
Financial institution JPMorgan claimed this week its expectation of “Israel” to go into a budget deficit of 4.5% next year, up from a previous 2.9%, which, in turn, will bring its debt-to-gross domestic product ratio to around 63% by the end of next year as opposed to 57.4% before the war.
Paul McNamara, lead manager on emerging market debt strategies at GAM, describes “Israel’s bonds” as looking “extremely cheap”.
Dani Naveh, chief executive of "Israel Bonds", relayed to The Financial Times that most of the investment was derived from the US and Europe, divided between private investors and institutions mainly represented by their respective governments.
It is worth mentioning that over 15 US states have invested in "Israel Bonds" since October 7, including Florida, New York, Texas, Alabama, Arizona, and Ohio.
Naveh said, “We have never faced such huge support, in terms of the numbers or the scope of investments, by so many people,” adding, “It allows the ministry of finance in Israel to raise billions of dollars of additional debt to fulfill all its special missions following the war.”
By 'special missions', Naveh disguises the term genocide which is proving to be expensive as the Israeli occupation's expenditures continue to pile up given that the funds allocated to support the Israeli occupation forces and the businesses located near the separation wall erected on Gaza's border seem to diminish as tax incomes are on a low.
"Israel", in light of the expenditures and the diminishing taxes, is facing a substantial budget deficit of 22.9 billion shekels in October, a near-five-fold increase from September's 4.6 billion. Over the past 12 months, the Israeli occupation's deficit has risen to 2.6%.