Bond issuance by Mekorot is successful; institutional demand is NIS 2.33 billion

Mekorot, Israel’s national water company, successfully completed the institutional stage of raising tradable bonds on Sunday through Series 11 expansion. The company originally aimed to raise NIS 800 million in debt, while as part of the institutional stage, the company received high demand totaling NIS 2.33 billion – almost three times the amount of the planned financing round – which ultimately led to an increase in the scope of the financing round to NIS 1.11 billion, subject to the approval of the rating company. 

As part of the offering, the company offered investors index-linked bonds with a duration of approximately 11.5 years, with repayment of the principal to be made in equal installments (except for the latter) until 2053. The bonds are rated AAA by Maalot S&P. Due to the high demand recorded, the institutional stage closed at a minimum price of 101.2 agorot at current value, reflecting an indexed annual yield of 3.13 percent, reflecting a spread of 1 percent over government bonds with similar durations.

The current financing round is the third that Mekorot is completing between the end of 2023 and the end of 2024. In September 2023, the company raised NIS 700 million, while last January, the company raised NIS 1.27 billion. The current financing round totals NIS 3 billion, almost all of which are earmarked for the development of the water sector. Company CEO Amit Lang explained that the results of the financing round constitute a vote of confidence by the capital market in Mekorot and its operations,  especially during the challenging period that Israel has experienced over the past year.

“The financing round will enable Mekorot to continue its critical investment program for the development of the water sector, including the actions required to expand infrastructure and supply water to communities in the south and the Gaza Envelope, in parallel with the required development in the northern and Galilee regions.”