Debt Developments in the Nonfinancial Private Sector, Fourth Quarter of 2017
In the fourth quarter of 2017, the balance of business sector debt decreased by approximately NIS 12 billion (1.3 percent), to NIS 858 billion. Outstanding household debt increased by about NIS 6 billion (1.2 percent) during the fourth quarter, to about NIS 530 billion at the end of the year. Despite that, the annual growth rate in 2017 of the debt balance, both housing and nonhousing, is lower than the growth rates in 2016, particularly in nonhousing debt.
The business sector’s outstanding debt
- In the fourth quarter of 2017, the balance of business sector debt decreased by approximately NIS 12 billion (1.3 percent), to NIS 858 billion, despite a quantitative increase in bank loans, direct loans from institutional investors, and tradable bonds in Israel. This increase was more than offset mainly as the result of the repayments by loans from nonresidents, and by an appreciation of 1.8 percent in the shekel vis-à-vis the dollar, which decreased the value of the debt denominated in and indexed to foreign exchange (Figure 1).
- In the fourth quarter, the business sector (excluding banks and insurance companies) issued about NIS 10.9 billion in bonds, following high issuances in the first three quarters of the year (about NIS 37 billion). There were notable issuances in the quarter by companies in the manufacturing and natural gas industry (about 38 percent of total issuances) and in the real estate and construction industry (about 32 percent). In January 2018, the business sector issued a total of about NIS 5.8 billion in bonds, mostly in tradable bonds, higher than the monthly average in 2017 (of approximately NIS 4 billion).
- In the fourth 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 1.1 percentage point, following a contraction in the previous quarter. In January 2018 there was a slight narrowing of the spread to about 1.0 percentage point.
- Households’ outstanding debt increased by approximately NIS 6 billion (about 1.2 percent) in the fourth quarter of 2017, to about NIS 530 billion. Despite that, the annual growth rate of the debt balance, both housing and nonhousing, is lower than the growth rates in 2016, particularly in nonhousing debt (growth rate of 4 percent in 2017 as opposed to 6 percent in 2016) (Figure 4). Outstanding housing debt increased in the fourth quarter by about NIS 4.5 billion (1.4 percent), to about NIS 337 billion.
- In the fourth quarter of 2017, new mortgages taken out totaled about NIS 13.5 billion, higher than the corresponding period last year (about NIS 12.2 billion). However, in January 2018 there was a decline, partly seasonal, in new mortgages taken out, and they totaled about NIS 4.6 billion (Figure 5).
For links to Data and Statistics on the Bank of Israel website:
 Data on debt to banks are based on monthly balance sheet data and not on annual financial statements, as the 2017 statements had not yet been published.