Debt Developments in the Economy, July–August 2012
Business sector debt increased by NIS 2.4 billion (0.3 percent) to about NIS 791 billion in July. Households' debt increased in July by about 0.8 percent, to about NIS 378 billion.
The business sector's outstanding debt
· The total outstanding debt of the business sector increased in July by about NIS 2.4 billion (0.3 percent) to about NIS 791 billion.
· The increase derived mainly from the effect of the depreciation of the shekel against the dollar, which increased the shekel value of foreign currency debt. The increase was partially offset by net repayments of NIS 1.8 billion, mainly of bank loans.
· In August, the business sector (excluding banks and insurance companies) issued only NIS 0.3 billion of bonds—the lowest level since February 2009. Bond issues since the beginning of the year average about NIS 2.2 billion a month.
· Households' outstanding debt in July was NIS 378 billion. The balance of housing debt increased by about NIS 2 billion (0.8 percent), and at the end of July stood at NIS 269 billion. Since the beginning of 2012, outstanding housing debt has increased by NIS 10.5 billion (4.1 percent).
· New mortgages taken out in August totaled about NIS 5.9 billion, compared with 4.9 NIS billion in July. The figure for August is about NIS 2.3 billion higher than the average per month (NIS 3.6 billion) since the beginning of the year. It is likely that the reason for this increase is that people moved to take out mortgages before the increase in the VAT rate that came into force at the beginning of September.
The cost of the debt
· The spread between interest on credit and interest on indexed deposits shrank by 0.8 percentage points in July, due to a decline in the interest rate on indexed credit. In the unindexed sector, the spread between interest on credit and interest on deposits shrank by some 0.2 percentage points due to a reduction in interest on unindexed credit.
· There was an decrease of 0.2 percentage points in the gap between the yield on indexed corporate bonds—the Tel-Bond 60 Index—and average yields on indexed government bonds, reaching 3 percentage points at the end of July. This, after a cumulative increase of 1.1 percentage points in this spread in the past 12 months.
· The average interest rate on new unindexed mortgages increased by 0.1 percentage points in August. The average interest rate on new CPI-indexed mortgages was unchanged.
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