Israel to issue long-term dollar bonds

Israel plans to issue long-term dollar bonds, including a 30-year issue, the Finance Ministry said yesterday. Accountant General Michal Abadi-Boiangiu said the exact size and other terms of the planned issues would depend on market conditions, but sources said it was likely Israel would seek to raise between $1.5 billion and $2 billion. It aims to price the 10-year bonds at about 135 basis points over comparable U.S. Treasuries, with 30-year bonds at 155 basis points over Treasuries. That would translate to a record-low yield of 3.35% for the 10-year bonds and 4.68% for 30 years. Treasury officials began meeting with investors in the United States and Europe about two weeks ago, as a first step in testing the market. The planned issue will help the government close its massive budget deficit this year. About 18% of its debt is in foreign currency. (Moti Bassok and Reuters)

Treasury, central bank agree on real estate fund

The Finance Ministry and Bank of Israel announced yesterday they have agreed on terms that will clear the way for a real estate and infrastructure fund with NIS 6 billion to invest over the next three years. The fund, whose structure has been the subject of protracted negotiations since it was approved in principle last July, aims to provide badly needed finance to the construction sector, where banks have approached the state-imposed ceiling on how much they can lend developers. "The undertaking is expected to lead to increased housing starts and lower borrowing costs for contractors and developers, which in turn is expected to lower home prices," the treasury said. The NIS 6 billion comes from value-added tax proceeds that the banks collect on credit they provide to contractors. (Nimrod Bousso)

Further layoffs expected in manufacturing

A survey of manufacturers indicates that more layoffs can be expected during the first quarter. While 65% don't foresee any change in their workforce, 20% said they'll likely reduce the number of employees as opposed to 15% who expect to be hiring. In comparison, 25% laid off workers in the first quarter of 2012 and only 13% increased their workforce. Zvi Oren, president of the Manufacturers Association of Israel, said: "The survey figures paint a grim picture and attest to the constant deterioration of Israeli industry. Industrial exports and output are in decline, and consequently workers are being laid off from factories throughout the country on a daily basis." The percentage reporting difficulty in recruiting skilled workers, however, rose from 74% in the third quarter to 76% at the end of the year. (Ora Coren)

Number of business failures rose 6% in 2012

The number of businesses that shut down in 2012 rose to 41,500, 6% more than in the previous year and 12% more than in 2008, according to the business information firm BDI Coface. The success and failure rate was largely a matter of geography: A disproportionate number of businesses in Haifa and the north closed down while those in Tel Aviv and the center fared much better. Meanwhile the number of new businesses launched declined for the third straight year, with the figure falling in 2012 7% from 2011. "Sluggishness in global markets spilling over into the Israeli economy and the credit crunch experienced by many firms due to the unstable business climate are expected to result in another increase in the rate of failures this year," predicted BDO Co-CEO Tehila Yanai. (Ora Coren)