Bank Hapoalim (TASE: POLI) has raised NIS 4 billion in a bond offering in order to continue expanding its credit portfolio. The bond offering was oversubscribed with offers totaling NIS 6.5 billion. Almost every Israeli institutional investor – insurance companies and investment houses – participated in the offering.
In series 101 bonds, the bank received NIS 1.2 billion at an interest rate of 3.76%, and in series 201, it accepted offers of NIS 2 billion at an interest rate of 1.39%.. Along with these series, the bank also issued NIS 940 million in CoCo (Contingent Convertible) bonds bearing a 3.09% interest rate.
The success of the debt raising was to a large part due to the bank’s third quarter financial report published this week, which showed a net profit of NIS 1.8 billion for the quarter and a net profit of NIS 4.8 billion in the first nine months of 2022.
The bank is preparing for a fall in demand for credit for mortgages and households. This is after in the third quarter of 2022 there was indeed an increase in housing loan balances of 2.2% compared to the previous quarter, but this is a lower rate than the increase in previous quarters. The bank said that the moderation in the rate of increase in balances was influenced by interest rate hikes, which reduced the ability of households to purchase an apartment, and also reduced purchases by investors.
In commercial credit, particularly in real estate, banks still feel lively demand due to the increase in construction starts over the last year, and so Bank Hapoalim not want to miss an opportunity to grow in this market, especially as there is a decrease in demand throughout the banking system.
While the issue of the regular series of bonds is intended for the current needs of the bank, by increasing the credit portfolio, the debt raised by the CoCo bond is to strengthen the secondary capital of the bank.
All the banks are currently raising debt. Israel Discount Bank (TASE: DSCT) has announced that it is raising a NIS 540 million CoCo bond and both Bank Leumi (TASE:LUMI) and First International Bank of Israel (TASE:FTIN1; FTIN5) are set to issue bonds. Last December, Hapoalim raised NIS 4.9 billion in two series of bonds in the largest-ever public offering in Israel. Prior to that Discount Bank raised NIS 4.6 billion in bonds, Mizrahi Tefahot Bank raised NIs 3.6 billion, and Leumi raised NIS 2.3 billion.
In October 2021, Hapoalim raised $2.6 billion in a private international offering of green CoCo bonds. The money was used to finance environmentally friendly projects.
Published by Globes, Israel business news – en.globes.co.il – on November 27, 2022.
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