News Column

Debt Developments in the Economy, April-May 2014

June 25, 2014



JERUSALEM, June 25 -- The Bank of Israel issued the following news release:

Business sector debt increased by 0.6 percent to around NIS 780 billion in April. Household debt increased by about NIS 0.9 billion (0.2 percent) to around NIS 414 billion at the end of the month.

The business sector's outstanding debt

* The total outstanding debt of the business sector increased by NIS 4.4 billion (0.6 percent) to around NIS 780 billion in April. The increased derived from net raising of debt, the result of funds raised through loans from banks and through tradable bonds in Israel, which were partially offset by the repayment of loans abroad. In the past two months, there has been a marked change in the trend of bank credit to the business sector: Following more than two years characterized by the repayment of debt, there were net issuances totaling about NIS 4.5 billion in the past two months.

* In May, the business sector (excluding banks and insurance companies) issued about NIS 10.4 billion in bonds, most of which were nontradable bonds. This figure is exceptionally high compared to the average over the past two years (about NIS 2.5 billion), due to a bond offering totaling about NIS 7 billion by a company in the energy industry in Israel, part of which was issued abroad.

See table & chart here: http://www.bankisrael.gov.il/en/NewsAndPublications/PressReleases/Pages/25-06-2014-DebtDeveApr-May2014.aspx

Household debt

* Households' outstanding debt increased by about NIS 0.9 billion (0.2 percent) to about NIS 414 billion in April. The increase derived from growth of about NIS 1.6 billion in housing debt, which totaled NIS 291 billion at the end of April. There were net repayments of non-housing debt.

* In May, there were about NIS 4.5 billion in new mortgages taken out. The average since the beginning of the year is about NIS 4.2 billion per month.

See table & chart here: http://www.bankisrael.gov.il/en/NewsAndPublications/PressReleases/Pages/25-06-2014-DebtDeveApr-May2014.aspx

The cost of the debt

* In April, the interest rate spread in the unindexed track remained essentially unchanged compared to the previous month.

* In the CPI-indexed track, the spread between the interest rate on new bank credit granted and the interest rate on deposits increased in April by about 0.27 percentage points, mainly due to the decline in interest on deposits.

* At the end of April, the spread between the yield on CPI-indexed corporate bonds--measured by the Tel Bond 60--and average yields on CPI-indexed government bonds was 1.23 percentage points, around 0.07 percentage points higher than the spread at the end of March.

* In May, the average interest rate on new unindexed mortgages declined by 0.05 percentage points. The interest rate on new CPI-indexed mortgages declined by around 0.12 percentage points.

See table & chart here: http://www.bankisrael.gov.il/en/NewsAndPublications/PressReleases/Pages/25-06-2014-DebtDeveApr-May2014.aspx

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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Source: Targeted News Service


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