News Column

BRIEF: Corporate bond market bubble concerns BoI

July 8, 2014

By Lital Istimati and Adrian Filut, Globes, Tel Aviv, Israel

July 08--Concerns about a bubble on the domestic bonds market are growing. It is now becoming clear that the issue not only bothers capital market brokers but also the members of the Bank of Israel Monetary Committee. From the protocols of the July interest rate decision, members expressed concerns that the bond market could threaten financial stability.

The meeting's protocols says, "The margins on the corporate bond market have been at low levels for a long time. The low level of interest in Israel and worldwide have increased the attractiveness of this investment. The risks reflected from this market in financial stability must be continued to be tracked." In other words the Bank of Israel fears a bubble in the corporate bond market.

Amid the escalating security situation and growing political instability the Tel Bond 20 Index lost 0.4% yesterday. Since mid-May the Tel Bond 20 Index is down 1.9% in contrast to the Tel Aviv 25 Index which has actually risen 0.6% over the same period.


(c)2014 the Globes (Tel Aviv, Israel)

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Source: Globes (Tel Aviv)

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