Bank Discount Raises Billions Internationally, Surpassing State Credit Rating
The bank completed a massive move in international markets that drew billions in demand, with a rating higher than that of the state and at a lower interest rate compared to government bonds.
Bank Discount completed yesterday the pricing stage for its debut international issuance of covered bonds for institutional investors outside Israel, totaling approximately 500 million euros. The move was successful and drew demand reaching approximately 1.4 billion euros (about 5 billion shekels), testifying to the international capital market's confidence in the bank's financial strength, the quality of its asset portfolio, and its management strategy.
The bonds were issued for a 5-year term, with a spread of 67 basis points and an annual interest rate of 3.875%. The issuance received some of the highest international ratings: AA- from the international rating agency Fitch and Aa3 from Moody’s. These ratings are higher than the rating received by the State of Israel's bonds in the last issuance, and at an interest rate about 5 basis points lower than the rate at which similar state bonds are traded.
This is a groundbreaking move for Bank Discount in global markets, based on advanced financial architecture and the diversification of long-term capital sources. The issuance attracted significant interest from a wide range of investors, and leading institutional entities from across Europe participated in it.
Avi Levy, CEO of the Discount Group, stated:
"The international issuance move constitutes a significant milestone in the bank's growth strategy, with the goal of establishing a diversified and stable financing platform that will allow the bank financial flexibility, while lowering fundraising costs and providing access to a broad and high-quality global investor base. The trust we receive from international markets is evidence of Bank Discount's financial strength."
The move was led at Bank Discount by Elad Fisher, Head of the Financial Markets Division, and Naama Levy, CEO of Discount Menepikim. Leading international underwriters participated in the issuance: Barclays Bank PLC, Citibank Europe plc, Deutsche Bank Aktiengesellschaft, Goldman Sachs International, and Merrill Lynch International.
According to Bank Discount, the bonds are expected to be registered in the institutional sequence system of the Tel Aviv Stock Exchange, subject to receiving the required approvals.
