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

Mekorot, Israel’s national water company, announced a successful institutional stage of its latest bond issuance on Sunday, significantly exceeding initial expectations.

Initially aiming to raise NIS 800 million through the expansion of Series 11 bonds, Mekorot saw institutional demand soar to NIS 2.33 billion – almost three times the planned amount. As a result, the company increased the bond issuance to NIS 1.11 billion, pending approval from the rating agency.

The bonds offered to investors are index-linked with an approximately 11.5-year duration and are set to mature by 2053. Repayments will be made in equal installments except for the final payment.

Rated AAA by Maalot S&P, the bonds closed at a minimum price of 101.2 agorot, translating to an indexed annual yield of 3.13% and a 1% spread over government bonds with comparable durations.

This is the third financing round Mekorot has completed within the past year. In September 2023, the company raised NIS 700 million; in January 2024, it secured an additional NIS 1.27 billion.

The current round brings Mekorot’s total financing to NIS 3 billion, primarily dedicated to the ongoing development of Israel’s water infrastructure.

Amit Lang, CEO of Mekorot, noted that this strong demand represents a “vote of confidence by the capital market” in the company’s operations and objectives, particularly amid a challenging year for Israel.

“This financing round will enable Mekorot to continue its critical investment program for developing the water sector, including essential infrastructure expansion to support communities in the South and the Gaza envelope, as well as the required development in the North and Galilee regions,” Lang stated.

The funds will help Mekorot meet growing water demands and advance its long-term national water security and infrastructure resilience goals.