BANK OF ISRAEL
Office of the Spokesperson and Economic Information
September 30, 2014
Press Release
Debt Developments in the Economy, July-August 2014
Business sector debt declined by about 0.1 percent to around NIS 772 billion in July.
Household debt increased by about NIS 2.2 billion (0.5 percent) to around NIS 422
billion at the end of the month.
The business sector’s outstanding debt
 The total outstanding debt of the business sector declined by NIS 0.7 billion (-0.1
percent) to around NIS 772 billion in July. The decline derived mostly from net
repayment of debt—repayment of bank loans, nontradable bonds, and nonbank loans.
The decline was partly offset by net raising of debt from abroad and by the effect of
the 0.1 percent increase in the Consumer Price Index.
 In the past three months, a return to a trend of decline in business-sector bank debt
has been seen, after an increase in March and April.
 In August, the business sector (excluding banks and insurance companies) issued
about NIS 2.5 billion in bonds, all of which were tradable bonds. This was lower than
the average amount of issuances over the first seven months of the year, which is
about NIS 3.7 billion per month.
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Household debt
 Households’ outstanding debt increased by about NIS 2.2 billion (0.5 percent), to
about NIS 422 billion, in July. Of that, the balance of outstanding housing debt
increased by about NIS 2.3 billion, to about NIS 297 billion at the end of July.
 In August, there were about NIS 4.1 billion in new mortgages taken out, about NIS
0.9 billion lower than the figure for July (see Figure 3). The average over the first
seven months of the year is about NIS 4.4 billion per month.
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The cost of the debt
 In July, the interest rate spread in the unindexed track widened by about 0.06
percentage points, as a result of an increase in interest rates on outstanding credit and
a decline in the interest rate on deposit balances.
 In the CPI-indexed track, the spread between the interest rate on new bank credit
granted and the interest rate on deposits remained essentially unchanged in July,
compared with the previous month.
 In July, the spread between the average yield on CPI-indexed corporate bonds—
measured by the Tel Bond 60—and average yields on CPI-indexed government bonds
widened by about 0.2 percentage points to about 1.5 percentage points. In August and
September, this spread narrowed by about 0.1 percentage point.
 In August, the average interest rate on new unindexed mortgages (variable-rate
interest) declined by 0.22 percentage points, in parallel with the decline in the Bank
of Israel interest rate. The average interest rate on new CPI-indexed mortgages (fixed
interest) remained virtually unchanged.
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For links to Data and Statistics on the Bank of Israel website:
http://www.boi.org.il/en/dataandstatistics/pages/default.aspx
http://www.boi.org.il/en/bankingsupervision/data/pages/tables.aspx?chapterid=13
Bank of Israel - Debt Developments in the Economy, July-August 2014
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