(Bloomberg) -- A group of Israel government officials is meeting investors in London this week as the country aims to issue eurobonds in the first quarter, according to people familiar with the matter, who asked not to be named because the meetings are private.
The deal size and borrowing currencies are still not decided, though Israeli officials have indicated that the country could sell a smaller figure than last year’s issuance in global markets as total borrowing is expected to drop. A sale could come in the next weeks, pending market conditions, one of the officials said.
The Israeli government issued $8 billion of bonds in March last year, which was its biggest single sale of dollar notes on record. It attracted almost $35 billion of bids from investors despite the country being at war with Hamas in Gaza since October of 2023.
Israel’s sovereign dollar bonds extended losses, posting some of the worst declines among emerging-market peers on Thursday, according to data compiled by Bloomberg. The notes due in March 2034 were trading near the weakest price in two months.
Ministry of Finance officials also held meetings with investors in US cities including New York, Washington and Philadelphia late last year.
The fighting in the Palestinian territory is less intense than it was a year ago, and Israel reached a ceasefire agreement with Hezbollah in Lebanon in November. Some Israeli assets have rallied since.
The shekel has gained 0.5% against the dollar since the announcement of the ceasefire on Nov. 27, the best performance among major world currencies, and the TA-35 stock index is up 7.2%. But the war’s impact on Israeli borrowing costs has persisted.
That’s in large part because the multi-front conflict has caused Israel’s budget deficit to soar. Last year, it covered the gap with a record volume of bonds in international and local markets.
Prime Minister Benjamin Netanyahu’s government is trying to narrow the fiscal gap this year and decrease bond issuance, though it’s expected to remain high by historical standards. The government targets a deficit of 4.5%-4.9% this year.
Citigroup Inc. organized some of the meetings with investors in London, according to two of the people. The bank would act as underwriter of a potential deal along with Bank of America and other banks, they said. A spokesperson for Citigroup declined to comment. A spokesperson for Bank of America also declined comment.
Israel’s finance ministry declined to comment.
The government told investors in the meetings that it’s considering issuing notes maturing in 10 years and in 30 years, two of the people said, though that’s not yet decided. While Israel’s finance ministry doesn’t publish annual funding targets, the Israeli stock exchange recently said the government would likely issue around 160 billion shekels ($47 billion) of bonds, including both local-currency and foreign exchange.
--With assistance from Srinivasan Sivabalan.
(Updates with bond prices in fourth paragraph.)
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