Debt Developments in the Nonfinancial Private Sector, Fourth Quarter of 2016
Business sector debt increased in the fourth quarter of 2016 by about NIS 6 billion (0.7 percent), to about NIS 848 billion. Household debt increased in the fourth quarter by about NIS 3 billion (0.6 percent), to around NIS 504 billion.
The business sector’s outstanding debt
· In the fourth quarter of 2016, business sector debt increased by about NIS 6 billion (0.7 percent) to around NIS 848 billion at the end of the year. The increase derived from a 2.3 percent depreciation of the shekel against the dollar, which increased the value of debt denominated in and indexed to foreign exchange. The increase was also a result of a net quantitative increase of about NIS 1.6 billion: tradable bonds issued in Israel and loans from institutional investors that were partly offset as a result of a quantitative reduction in bank loans, nontradable bonds, and loans from nonresidents.
· In the fourth quarter, the business sector (excluding banks and insurance companies) issued about NIS 8.5 billion in bonds, mostly tradable, similar to the total issuances in the same period of the previous year. In January 2017, there were about NIS 5.5 billion total issuances, higher than the average of monthly issuances in 2016 (NIS 3.7 billion).
· The spread between yields on CPI-indexed corporate bonds, as measured by the Tel Bond 60 index, and the yield on CPI-indexed government bonds narrowed by about 0.2 percentage points in the past two months, to about 1.24 percentage points in January 2017, following an increase of about 0.16 percentage points between August and November, 2016.
· Households’ outstanding debt increased by about NIS 3 billion (about 0.6 percent) in the fourth quarter to about NIS 504 billion, lower than the quarterly increases in previous quarters.
· Outstanding housing debt increased in the fourth quarter by about NIS 2 billion (0.7 percent), to about NIS 339 billion.
· In the fourth quarter of the year, new mortgages taken out totaled about NIS 12 billion, lower than the same period last year (NIS 15.5 billion). This was further to the moderate downward trend since the second quarter of 2016.
In 2016, new mortgages taken out totaled about NIS 59 billion, lower than the total taken out in 2015 (about NIS 65 billion).
In January 2017, there was a seasonal decline in new mortgages taken out compared with the previous month, with new mortgages taken out in January totaling about NIS 4.4 billion (Figure 4).