Debt Developments in the Nonfinancial Private Sector, Second Quarter of 2017

In the second quarter of 2017, there was a significant quantitative increase in business sector debt that contributed to an increase of about 1.5 percent in the balance of business sector debt, to about NIS 852 billion. Outstanding household debt[1] increased by about NIS 7.6 billion (1.5 percent) during the second quarter, to about NIS 518 billion at the end of the quarter.

 

The business sector’s outstanding debt

·     In the second quarter of 2017, there was a significant quantitative increase in business sector debt in most channels, which totaled about NIS 18.2 billion.  This quantitative increase was comprised mainly of an increase in tradable bonds in Israel, loans from nonresidents, and bank and nonbank loans.  It was partly offset as a result of the effect of the 3.7 percent appreciation of the shekel vis-à-vis the dollar, which lowered the value of the debt denominated in and indexed to foreign exchange, and by a quantitative decline in non-tradable bonds.  As a result of these effects, business sector debt increased by about NIS 12.9 billion (1.5 percent) to around NIS 852 billion at the end of the quarter.

·    In the second quarter, the business sector (excluding banks and insurance companies) issued about NIS 9.8 billion in bonds, following high issuances in the previous quarter (about NIS 17 billion).  About half of the issuances in the second quarter were by companies in the real estate and construction industry. In July 2017, the business sector issued a total of about NIS 6.1 billion in bonds, mostly in tradable bonds.

·     In the second quarter, the spread between yields on CPI-indexed corporate bonds, as measured by the Tel Bond 60 index, and the yield on CPI-indexed government bonds widened by about 0.1 percentage points to about 1.16 percentage points, following a decline in the first quarter. In July 2017 the spread remained virtually unchanged.


Household debt

·      Households’ outstanding debt increased by about NIS 7.6 billion (about 1.5 percent) in the second quarter to about NIS 518 billion. Outstanding housing debt increased in the second quarter by about NIS 5.6 billion (1.8 percent), to about NIS 328 billion.

·     In the second quarter of the year, new mortgages taken out totaled about NIS 13.1 billion, lower than the same period last year (about NIS 15.8 billion).  However, beginning in May 2017, new mortgages taken out increased, and in July they totaled about NIS 5.1 billion taken out.  Net of seasonal effects, new mortgages taken out in July totaled about NIS 4.3 billion (Figure 4).


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


http://www.boi.org.il/en/BankingSupervision/Data/Pages/Tables.aspx?ChapterId=19​ 




Graphs and data​

[1] Beginning with this publication, a methodological improvement was made to data on household debt from banks: This improvement does not affect total household debt, but only affects the distribution of debt to housing and nonhousing.  The improvement was made retroactively for the entire series.  For details, see the tables on credit balances published on the Bank of Israel website.