(Bloomberg) -- Israel turned to the private-placement bond market shortly before issuing its largest-ever public deal this week, as it increases debt sales to counter the coronavirus pandemic and fund a growing fiscal shortfall.
The government did a private placement last week with two investors for 700 million euros ($765 million) of bonds maturing in 2024 and 2029, according to a Finance Ministry official, who requested anonymity. It then issued $5 billion in the Eurobond market on Tuesday. That deal got more than $25 billion of orders from investors and included the Middle East's first century bonds from a government.
Read more: Israel Sells Rare Century Eurobond as Part of $5 Billion Deal
Private-placement investors made the request and the government saw the terms as attractive, the official said.
Israel issued 500 million euros of the January 2024 bonds at a yield of around 0.8% and they'll be fungible with the country's existing 1.5 billion-euro notes of the same maturity, according to data compiled by Bloomberg. The 200 million euros of 2029 notes will become part of Israel's 1.25 billion-euro bond maturing in January of the same year. The yield on that rose 1 basis point to 0.99% by 9:49 a.m. in London on Thursday.
Israel will now mainly focus on the domestic bond market for its funding, but may do more private placements if it sees worthwhile opportunities, the official said.
The central bank announced last month it would buy government bonds in the secondary market for the first time since 2009. It committed to purchasing 50 billion shekels ($13.8 billion).
In addition, Prime Minister Benjamin Netanyahu has unveiled a fiscal package worth 80 billion shekels to boost the economy.
The budget deficit will rise to at least 7% of gross domestic product this year, according to analysts at Mizrahi Tefahot Bank. That would be the largest this century, according to data compiled by Bloomberg.
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