Debt Developments in the Nonfinancial Private Sector, Third Quarter of 2018
In the third quarter of 2018, the balance of nonfinancial private sector debt increased by approximately NIS 7.5 billion (0.5 percent) to about NIS 1.5 trillion
In the third quarter of 2018, the balance of nonfinancial private sector debt increased by approximately NIS 7.5 billion (0.5 percent) to about NIS 1.5 trillion: The balance of business sector debt increased by approximately NIS 2 billion (0.2 percent), to NIS 902 billion; Outstanding household debt increased by about NIS 6 billion (1 percent) during the third quarter, to about NIS 549 billion at the end of the quarter, with most of the growth in housing debt. The decline in the annual rate of growth of nonhousing debt continued.
The business sector’s outstanding debt
- In the third quarter of 2018, the balance of business sector debt increased by approximately NIS 2 billion (0.2 percent), to NIS 902 billion. The increase was mainly a result of quantitative growth in bank loans and in direct loans from institutional investors. This increase was mostly offset by a quantitative reduction in loans from nonresidents and in tradable bonds in Israel, as well as from an appreciation of about 0.6 percent in the shekel against the dollar, which decreased the value of the debt denominated in and indexed to foreign exchange (Figure 1).
- In the third quarter, the business sector (excluding banks and insurance companies) issued about NIS 6.3 billion in bonds, significantly lower than the average amount raised in the previous four quarters (an average of NIS 12 billion per quarter). Further to the first half of the year, the construction and real estate industry remained prominent with the highest rate of issuances. In October 2018, the business sector issued bonds worth about NIS 4.1 billion, mostly in tradable bonds.
- In the third quarter, 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 0.21 percentage points to about 1.1 percentage points, following the expansion that began in the end of 2017. In October 2018, this spread expanded, to about 1.2 percentage points.
- Households’ outstanding debt increased by about 1 percent in the third quarter of 2018, to about NIS 549 billion: The balance of housing debt increased by about NIS 6 billion (about 1.6 percent), to about NIS 354 billion; the balance of nonhousing debt remained almost unchanged at about NIS 195 billion: The decline in debt to the banks was offset by an increase in debt to other lenders (Table 2). However, the decline in the annual rate of growth of the balance of nonhousing debt, which began at the end of 2016, continued (Figure 4).
- In the third quarter of 2018, new mortgages taken out totaled about NIS 14.8 billion, higher than the corresponding period last year (about NIS 13.7 billion). In October 2018 new mortgages taken out totaled about NIS 5 billion, similar to the monthly average during the third quarter (Figure 5).
Links to Data and Statistics on the Bank of Israel website: