A few days after reporting a record annual profit, Bank Hapoalim is striking while the iron is hot and raising over NIS 3 billion via two different debt instruments: CoCo (contingent convertible) bonds of up to 25 years, and 12-month commercial paper.
Yesterday evening, Bank Hapoalim completed the institutional stage of the CoCo bond offering through expansion of two existing bond series. One of the series matures in 25 years. The bank also issued 12-month commercial paper for the first time. Total demand was over NIS 5 billion. Distribution was led by Leader Capital Markets.
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There was high demand for the two CoCo bond series, of which the bank decided to fill NIS 1.17 billion. On the long bond, the spread over government bonds with similar terms was 1.62%, while the spread on the shorter bond was 1.28%. The commercial paper offering also met with high demand, of which the bank decided to fill NIS 1.9 billion, with a spread of 0.09% over the Bank of Israel interest rate.
The public stage of the offering is scheduled for Thursday. The CoCo bonds will be included in the bank’s tier 2 capital, and will facilitate further growth in the bank’s business as well as strengthening its capital base for an extended period.
After the financial crisis of 2008, CoCo bonds became a widespread means of raising capital for banks. They behave like conventional bonds, but at a time of crisis become convertible to equity, helping to boost the issuing bank’s liquidity.
Published by Globes, Israel business news – en.globes.co.il – on March 5, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
