Debt Developments in the Nonfinancial Private Sector, First Quarter of 2019

In the first quarter of 2019, the balance of nonfinancial private sector debt increased by approximately NIS 24 billion (1.6 percent) to about NIS 1.5 trillion.

24/06/2019

In the first quarter of 2019, the balance of nonfinancial private sector debt increased by approximately NIS 24 billion (1.6 percent) to about NIS 1.5 trillion. Most of the increase came from an increase in the balance of business sector debt (about NIS 19 billion; 2 percent). Most of the growth in outstanding household debt was in housing debt.

The nonfinancial business sector’s outstanding debt[1]

In the first quarter of 2019, the balance of business sector debt increased by approximately NIS 19 billion (2 percent), to NIS 942 billion. The increase was mainly a result of a significant quantitative increase totaling about NIS 26 billion, and was mainly comprised of bank loans and loans from nonresidents. This increase was partly offset by a 3.1 percent appreciation of the shekel against the dollar, which lowered the value of the debt denominated in and indexed to foreign exchange. (Figure 1).
In the first quarter, the business sector issued about NIS 9 billion in bonds, slightly lower than the average amount raised in 2018 (an average of about NIS 9.7 billion per quarter). Bond issuances continued to be led by companies in the construction and real estate industry (about 68 percent of total issuances). In April 2019, the business sector issued bonds worth about NIS 3.3 billion, mostly in tradable bonds. (Figure 3).

In the first quarter, the spread between yields on CPI-indexed corporate bonds that are included in the Tel Bond 60 index, and the yield on CPI-indexed government bonds narrowed by about 0.3 percentage points to about 1.22 percentage points, after widening by about 0.5 percentage points in the previous quarter. In April 2019, the spread continued to narrow, to about 1.14 percentage points (Figure 4).

Household debt

Households’ outstanding debt increased by about NIS 5 billion (1 percent) in the first quarter of 2019, to about NIS 562 billion. Most of the increase – about NIS 4 billion – was in housing debt (to about NIS 364 billion), and the rest – about NIS 1 billion – was in nonhousing debt (to about NIS 198 billion).
There was a slight increase during the quarter in the annual growth rate of nonhousing debt, contrary to the trend of the past two years (Figure 5).
In the first quarter of 2019, new mortgages taken out totaled about NIS 15.5 billion, higher than the corresponding period last year (about NIS 14.1 billion). In April 2019, new mortgages taken out totaled about NIS 5 billion, similar to the monthly average during the first quarter of the year (Figure 6).

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