Debt Developments in the Nonfinancial Private Sector, Second Quarter of 2020
· The spread between the yields on corporate bonds included in the Tel Bond 60 index and the yields on indexed government bonds narrowed to about 1.7 percentage points, following the significant expansion in the previous quarter, mainly in March, in view of the COVID crisis.
· The balance of households’ housing debt continued to increase in the second quarter, growing by about NIS 7 billion (1.7 percent).
· The balance of nonhousing debt declined by about NIS 4 billion (1.9 percent), continuing the decline in the annual rate of change of this balance, with a negative rate of change for the first time in years.
The nonfinancial business sector’s outstanding debt
· In the second quarter of 2020, the balance of business sector debt declined by approximately NIS 17 billion (1.7 percent), to about NIS 952 billion. The decline encompassed both bank debt and nonbank debt. The decline in outstanding nonbank debt reflects a continued decline in the annual growth rate of this balance, which began in the previous quarter (Figure 2).
· The decline in outstanding business sector debt in the second quarter was due to net repayments of bank loans and of loans from nonresidents, as well as the 2.8 percent appreciation of the shekel against the US dollar, which lowered the value of debt denominated in or indexed to the dollar. These effects were partly offset by net debt raised in the tradable bonds channel in Israel (Figure 1).
· In the second quarter, the business sector issued about NIS 11.7 billion in bonds, higher than the average quarterly amount raised in the previous four (about NIS 10.9 billion). About 55 percent of bond issuances in the second quarter were by companies in the construction and real estate industry. In July 2020, the business sector issued bonds worth about NIS 3.3 billion, and in August it issued bonds worth about NIS 3.8 billion. (Figure 3).
· In the second quarter, the spread between yields on corporate bonds that are included in the Tel Bond 60 index, and the yields on CPI-indexed government bonds narrowed by about 0.5 percentage points, to about 1.7 percentage points. This followed the significant expansion in the previous quarter, mostly in March, in view of the COVID crisis. In July–August, the spread continued to narrow, to about 1.3 percentage points (Figure 4).
 Israeli firms, excluding banks, credit card companies, and insurance companies.
 The change in the spread from one quarter to the next is calculated as the difference between the average spread in the final month of the reviewed quarter and the average spread in the final month of the previous quarter.