Bank Leumi Completes Successful €750 Million Mortgage-Backed Bond Issuance
Overview of the Bond Issuance
Bank Leumi has successfully completed an issuance of mortgage-backed bonds amounting to approximately €750 million, with a staggering demand resulting in orders totaling €4.6 billion. This series of bonds has a five-year term, with a margin of 0.68% above equivalent government bonds, and an annual interest rate of 3.197%. The bonds received high ratings from leading credit rating agencies, with Fitch assigning a rating of -AA and Moody’s rating them Aa3-significantly higher than the ratings of Israeli government bonds from the last issue.
Innovative Financial Instrument
Mortgage-backed securities represent a financial instrument where bond payments to investors are secured by a portfolio of mortgages. This innovative borrowing method is primarily common abroad, making Bank Leumi the first financial institution in Israel to pursue such issuance from foreign investors since it previously led a similar initiative back in 2020.
Market and Investor Impact
The global market for mortgage-backed securities is vast, estimated at around €3 trillion. Bank Leumi’s issuance offers several notable advantages. It is backed by a stable and diversified underlying asset, enabling lower financing costs compared to regular corporate bonds. Additionally, it appeals to a broad spectrum of foreign investors from markets like Germany, France, Switzerland, and others that have previously had limited exposure to the Israeli banking sector. For institutional investors, these bonds serve as an efficient tool for managing debt portfolios and diversifying risk while aligning with long-term commitments.
Leadership and Participation
The bond issuance was spearheaded by Deputy CEO and Head of Capital Markets Division, Omer Ziv, alongside the Head of Legal Advisory Division, Nitzan Sandor. This fundraising aligns with Bank Leumi’s ongoing growth trend and initiative to diversify its funding sources. Notable financial institutions that participated as underwriters included Barclays, JP Morgan, Goldman Sachs, and UBS. The bonds are expected to be registered in the institutional continuum system of the Tel Aviv Stock Exchange.
Company Statement
Hanan Friedman, CEO of Bank Leumi, stated, “The unique issuance we led, combined with record demand and the impressive ratings we received from leading global rating agencies, is a decisive indication that Leumi is the leading bank in Israel from the perspective of foreign investors. Mortgage-backed bonds are start of the critical tools in the global debt market for investors, and I am proud that Leumi is the first Israeli bank to lead this important initiative in opening the market in Israel for such issuances.”
Meta Description: Bank Leumi has raised €750 million in a mortgage-backed bond issuance, attracting significant foreign investor interest and achieving high ratings from credit agencies.
Tags: Bank Leumi, mortgage-backed securities, bond issuance, foreign investors, credit ratings, financing, Israeli banking sector.