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Debt Developments in the Economy, FebruaryMarch 2012
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Business sector debt increased by 0.6 percent to about NIS 771 billion in February. Households' debt declined in February by about 0.3 percent, to about NIS 365 billion.
The business sector's outstanding debt
Ÿ The total outstanding debt of the business sector increased in February by about NIS 5 billion (0.6 percent) to about NIS771billion.
Ÿ The increase derived mainly from net debt raised of NIS 3 billion, primarily through bank loans (about NIS 2 billion). The rest of the increase derived from the 0.9 percent depreciation of the shekel against the dollar, which increased the shekel value of foreign currency debt by about NIS 2 billion.
Ÿ In March, the business sector (excluding banks and insurance companies) issued about NIS 2.3 billion of bonds, of which some NIS 1.8 billion were tradable bonds. Bond issues since the beginning of the year average about NIS 2 billion a month.
Ÿ About 40 percent of the debt is unindexed, CPI-indexed debt constitutes about 34 percent of the total, and foreign currency indexed debt, 27 percent. Since the beginning of 2008, the share of unindexed debt has increased by about 10 percentage points, most of it at the expense of a reduction in the share of CPI-indexed debt.

B. Household debt
Ÿ Households' outstanding debt in February was NIS 365 billion. The balance of housing debt increased by about NIS 1 billion (0.3 percent), and at the end of February reached NIS 260 billion.
Ÿ New mortgages taken out in March totaled NIS 3.4 billion, 14 percent above the level in February. Some of the increase, however, was apparently due to seasonal factors. Total mortgages granted in the twelve months to March (inclusive) amounted to 3 percent less than the total in the twelve months to February, continuing the decline evident since the peak level in May 2011.
C. The cost of the debt
Ÿ The spread between interest on credit and interest on deposits in the indexed sector widened by 0.6 percentage points in February, as the interest on indexed deposits fell. In the unindexed sector there was essentially no change in the spread between interest on credit and interest on deposits.
Ÿ In February, the gap between the yield on indexed corporate bonds (the Tel-Bond 60 Index) and average yields on indexed government bonds increased by 0.1 percentage points, to 2.7 percentage points. Since March 2011 this spread has widened by 1.5 percentage points.
Ÿ The interest rate on new unindexed and CPI-indexed mortgages declined a little in March.

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