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The following is a summary of developments in nonfinancial private sector debt in the second quarter of 2025:
- In the second quarter of 2025, the balance of nonfinancial private sector debt (both business and household) increased by approximately 2.1 percent to a level of NIS 2.3 trillion. The annual growth rate of outstanding debt increased to about 8.2 percent.
- The balance of business sector debt increased by about 2.6 percent (about NIS 36 billion) during the second quarter, to about NIS 1.5 trillion. This was mainly due to net debt raised via bank loans.
- The balance of household debt also continued to increase during the quarter, to about NIS 866 billion, mainly due to a combination of an increase in the balance of housing debt (by about NIS 12 billion, 2 percent), which was due to new mortgage volume from banks, and a decline in the balance of nonhousing debt (about NIS 1.4 billion, 0.6 percent) for the first time since the last quarter of 2023, to NIS 236 billion, as a result of a decline in the balance of debt to banks and to credit card companies.
The nonfinancial business sector’s[1] debt
- In the second quarter of 2025, the balance of business sector debt increased, by about 2.6 percent (about NIS 36 billion) to NIS 1.5 trillion.
- The increase in the balance derived from considerable net debt raised totaling NIS 58 billion, mainly the result of bank credit taken out, given mostly to the financial services sector, including credit for collaterals for derivative and securities lending transactions. In addition, funds raised via tradable bonds in Israel contributed to the increase, as did an increase of about 1.3 percent in the Consumer Price Index[2] which increased the value of the CPI-indexed debt; these increase were partly offset by an appreciation of about 9.3 percent in the shekel vis-à-vis the dollar, which reduced the value of the debt denominated in and indexed to foreign currency, as well as from net redemptions in debt raised abroad and in nontradable bonds in Israel.
- These effects led to a continued increase in the annual growth rate of the balance of bank debt—to about 16 percent—a trend that began in the second half of 2024, while the annual growth rate of debt to nonbank lenders continued to decline, for the second consecutive quarter, though it remained positive—at about 0.5 percent compared to 3.5 percent in the previous quarter (Figures 1, 2).
- In the second quarter of the year, the business sector issued about NIS 28 billion in bonds, notably higher than the quarterly average of funds raised in the previous four quarters (about NIS 16 billion per quarter. Approximately 43 percent of the issuances in the second quarter were carried out by companies in the real estate and construction industry, which continues to lead in bond issuances, similar to previous years (Figure 3).
In July 2025, the business sector issued bonds worth NIS 14 billion, of which about 56 percent were issued by companies in the real estate and construction industry.
- In the second quarter of 2025, the spread[3] between yields on corporate bonds that are included in the Tel Bond 60 Index and the yields on CPI-indexed government bonds continued to narrow, to about 0.83 percentage points, and it continued to decline in July 2025, to about 0.77 percentage points. In August, 2025, there was a slight increase in this spread, to about 0.79 percentage points, which is still low relative to the past three years (Figure 4).
[1] Israeli corporations, excluding banks, credit card companies, and insurance companies.
[2] CPI-indexed balances are calculated according to the known CPI on the date the financial statements are published, so that a change in the CPI refers to the change between the known CPI and the CPI of the preceding month.
[3] The cha1nge in the spread from one quarter to the next is calculated as the difference between the average spread in the final month of the reviewed quarter and the average spread in the final month of the previous quarter.