Discount Bank yesterday completed the pricing phase of the first international dollar debt issue in the bank’s history. In the offering, in which institutional investors from the USA, the UK, the countries of the European Union and other countries participated, high demands of approximately 3 billion dollars were registered, of which the bank responded to 800 million dollars at a margin of 190 basis points above the yield of US government bonds , for a period of five years.
The purpose of the issue is to expand the bank’s funding sources among foreign institutional investors. The issue was led on behalf of the bank by Assaf Pasternak, head of the financial markets division; Barak Nardi, head of the strategy, finance and holdings division; Vagad Bar Lev, CEO of Discount Henkot.
“The impressive results of the IPO testify to the strength of Discount, to the confidence of foreign investors in the direction the bank is heading and in its growth potential,” said Uri Levin, the bank’s CEO, “the IPO opens up a new avenue for the bank to raise long-term liquidity, and allows us to continue to lead the competition in the banking system and to promote growth and prosperity for customers and investors in Israel and overseas.”
The 5-year US bond provides investors-holders with a yield of 3.88%, which means that the Bank Discount issue was made at a yield of 5.78% (190 basis points above the US bond = 1.9% above the US bond) . This seems to be a good return for the holders, so even though the raising seems large and significant in terms of discount, it is all a matter of price. The high demand is due to the bank’s good financial condition and the yield. In any case, there is an advantage here in the diversification of sources and in taking dollar credit, which actually also diversifies the type of credit – most of Discount’s debt is in shekels.
According to the bank’s latest reports, Discount, like the entire banking system, is in good shape, but the fear is that the global slowdown will seep into Israel and in accordance with the banks’ reports. The bank earned NIS 893 million in the third quarter of 2022 – a 23.7% increase compared to the corresponding quarter last year. However, the bank recorded losses in the bond holdings that were created due to the increase in interest rates. When interest rates rise, the banks of course enjoy an increase in income and profits, but their investments in bonds record price decreases. And yet, despite the losses, these are impressive profits:
The credit to the net public It amounted to NIS 236,881 million in the September 2022 branch, compared to NIS 213,156 million at the end of 2021. public deposits – At the end of the quarter, public deposits amounted to NIS 290,646 million compared to NIS 260,907 million at the end of 2021.
Comments to the article(0):
Your response has been received and will be published subject to the system policy.
Thanks.
for a new comment
Your response was not sent due to a communication problem, please try again.
Return to comment