BANK OF ISRAEL
Office of the Spokesperson and Economic Information
Press Release
February 26, 2014
Debt Developments in the Economy, 2013
Summary
 In 2013, the balance of debt in the Israeli economy grew by about NIS 43 billion
(2.3 percent) to about NIS 1.9 trillion, due to net debt raising of about NIS 67
billion, mostly by the government and households, which were partially offset by
the appreciation of the shekel by about 7 percent, which led to a decline in the
shekel value of foreign currency-denominated debt.
 In 2013, there was a decline of NIS 16 billion in business sector debt (2 percent),
to around NIS 778 billion. In contrast, household debt increased during the year
by about NIS 27 billion (7.1 percent) to about NIS 410 billion at the end of the
year.
 Bond issuances by the business sector (excluding banks and insurance companies)
totaled about NIS 30 billion in 2013, an increase of about 2 percent, mostly
through tradable bonds.
 In 2013, new mortgages taken out totaled about NIS 51.7 billion, compared with
about NIS 46.7 billion in 2012.
The business sector's outstanding debt
 In 2013, the total outstanding debt of the business sector declined by NIS 16
billion, to NIS 778 billion, a decline of 2 percent. The decline derived mainly
from the appreciation of the shekel, while total debt raised totaled about NIS 3
billion, an increase of 0.4 percent. Debt raised was concentrated in credit from
abroad and in direct loans from institutional investors to the business sector, and
was partially offset by repayments of bank credit and non-tradable bonds.
 The business sector debt to business sector GDP ratio was 101 percent at the
end of 2013, a decline of about 7 percentage points since the beginning of the year
combining a decline in debt and an increase in GDP. This decline continues the
trend of decline in the debt ratio that began at the end of the first quarter of 2008
and has totaled 29 percentage points since then.
 Data on the breakdown of banking debt by sectors show that in the past two
years, there has been some replacement of credit made available by the banks to
the business sector with credit to households. Since the end of 2011, total
outstanding business sector debt to the banks declined from NIS 405 billion to
NIS 390 billion, while total outstanding household debt to the banks increased
from about NIS 320 billion to about NIS 370 billion. Most of the increase in
household debt is from housing credit.
Corporate bond issuances
 Bond issuances by the non-financial business sector totaled about NIS 30 billion,
mostly through tradable bonds, about NIS 2 billion more than in 2012. The
average of monthly issuances since the beginning of the year was about NIS 2.5
billion.
 Excluding bonds of government companies, there was a more prominent
increase in corporate issuances, since government company issuances shrank from
about NIS 10 billion in 2012 to just NIS 2 billion in 2013.
 In the real estate industry, there was growth of about 60 percent in issuances
compared with 2012, with issuances in 2013 totaling about NIS 16 billion. In
contrast, there was a decline in the volume of debt raised in the financial industries
(NIS 4.9 billion, a decline of 55 percent) and the trade and services industry (NIS
7.4 billion, a decline of 34 percent).
Households' debt
 Households' outstanding debt increased in 2013 by about NIS 27 billion (7.1
percent) to around NIS 410 billion, primarily due to new loans taken from banks.
Housing debt increased by about NIS 19 billion (7.3 percent) during the year,
mostly due to net new debt of about NIS 16 billion, a pace similar to the growth in
the previous two years.
 New mortgages taken out in 2013 totaled about NIS 51.7 billion, compared with
about 46.7 billion in 2012.
 The ratio of households’ debt to GDP was about 39.4 percent at the end of 2013,
representing moderate growth of about one percentage point over 2012. This
growth derived from an increase in households’ debt at a higher rate than the
increase in GDP.
The cost of the debt
 During 2013, the interest rate on indexed bank credit declined by about 0.3
percentage points to 2.5 percent. The spread between credit and interest on
unindexed deposits narrowed by about 0.1 percentage points in 2013.
 During 2013, the average interest rates on new variable rate, unindexed mortgages
declined by about 0.9 percentage points, in parallel with a decline of 1 percentage
point in the Bank of Israel interest rate. The average interest rate on CPI-indexed
mortgages declined by about 0.5 percentage points in the first half of the year, and
increased by about 0.75 percentage points in the second half, to 2.5 percent at the
end of the year.
 The spread between yields on the TelBond 60 index (of indexed corporate bonds)
and the average yield on indexed government bonds narrowed by about 0.5
percentage points during 2013 to 1.22 percentage points.
December 2013 – January 2014
Balances
 In December 2013, the balance of debt in the Israeli economy declined by about
NIS 4 billion (0.2 percent), due to the appreciation of the shekel by about 1.5
percent, while new household debt was offset by government debt repayments.
 The total outstanding debt of the business sector declined by about NIS 4
billion. The decline derived from the effects of the appreciation of the shekel,
while the repayment of bonds was partially offset by the raising of debt from the
banks. Outstanding household debt increased by about NIS 2.3 billion, mostly
as a result of the raising of new debt from the banks.
New credit and issuances
 New credit issued (seasonally adjusted) totaled about NIS 7.4 billion in January,
similar to the average in 2013 (NIS 7.5 billion). In January, new mortgages taken
out totaled about NIS 3.8 billion, slightly below the monthly average for 2013
(NIS 4.3 billion).
 In January, the nonfinancial business sector issued bonds totaling about NIS 0.7
billion, all in tradable bonds.
Prices
 The interest rate spread in the unindexed sector increased by about 0.06
percentage points in December, as a result of a decline in interest rates on deposit
balances. In December, the interest rate spread in the indexed sector narrowed by
about 0.05 percentage points due to an increase in the interest rate on deposits that
was larger than the decline in the interest rate on marginal indexed credit (issued
during the month).
For links to Information and Data on the Bank of Israel website:
http://www.boi.org.il/en/DataAndStatistics/Pages/MainPage.aspx?Level=4&Sid=53&
SubjectType=2
For mortgage data:
http://www.boi.org.il/en/BankingSupervision/Data/Pages/Tables.aspx?ChapterId=13