Government bond issuance reduced in July

ISRAEL - In Brief 01 Jul 2021 by Jonathan Katz
MoF will reduce bond issuance in July. In July, government bond issuance will decline to 7.0bn ILS down from 9.0bn last month. We note that the weekly bond issuance remains fairly unchanged at around 1.7-1.8bn, similar to June (which had five weeks of issuance). Nevertheless, we have seen a gradual reduction in issuance YTD (12bn in January), as the economy has opened up, tax revenues have surprised on the upside and Covid fiscal supports are declining. We think the official fiscal deficit estimate of 8% GDP this year will be revised downwards into the 6%-7% range. Lower bond issuance allows the BoI to continue to quietly taper without any negative impact on yields. In addition, the bond market should be encouraged by the fiscally hawkish tone coming from the new Minister of Finance. In short, the long end of the curve still appears attractive, in our view. Demand from institutions should remain strong with huge bond redemptions expected of 15.1bn in July.

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