Debt Developments in the Nonfinancial Private Sector First Quarter of 2020

 Full press release

The advent of the corona crisis led to a number of developments in the data on nonfinancial private sector debt:


  •  In the first quarter of 2020, there was significant net debt raised through bank loans (flow of about NIS 17 billion) to the business sector;
  • The spread between the yields corporate bonds included in the Tel Bond 60 index and the yields on indexed government bonds widened significantly in March, to about 2.2 percentage points.
  • The balance of households’ nonhousing debt declined significantly, by about NIS 4 billion (1.8 percent), for the first time in years.
  •  In terms of housing debt, there was a marked increase in the volume of mortgages in March, followed by a decline to average levels in April.


The nonfinancial business sector’s outstanding debt[1]

  • In the first quarter of 2020, the balance of business sector debt increased by approximately NIS 7 billion (0.8 percent), to NIS 968 billion. The increase was mainly a result of significant net debt raised through bank loans (about NIS 17 billion) in view of the corona crisis.  It was also a result of a 3.2 percent depreciation of the shekel against the dollar, which increased the value of debt denominated in and indexed to foreign exchange. (Figure 1).  These effects were mostly offset by net repayments in nonbank fundraising channels—loans from nonresidents and from institutional investors.  As a result, the annual rate of change of outstanding nonbank debt declined (Figures 1 and 2).
  • In the first quarter, the business sector issued about NIS 10.6 billion in bonds, similar to the average quarterly amount raised in 2019. Bond issuances continued to be led by companies in the construction and real estate industry (about 65 percent of total issuances). In April 2020, the business sector issued bonds worth about NIS 5.7 billion, and in May it issued bonds worth about NIS 4.4 billion. (Figure 3).
  • ​In March, the spread between yields on corporate bonds that are included in the Tel Bond 60 index, and the yields on CPI-indexed government bonds widened significantly (by about 1.2 percentage points) relative to the spread in February, against the background of the corona crisis, to about 2.2 percentage points. In April 2020, the spread narrowed back to about 1.7 percentage points (Figure 4).

[1] Israeli firms, excluding banks, credit card companies, and insurance companies.