Debt Developments in the Nonfinancial Private Sector, Second Quarter of 2021

The following is a summary of developments in nonfinancial private sector debt in the second quarter of 2021:

• In the second quarter of 2021, there was an increase of about NIS 34 billion (3.4 percent) in the balance of business sector debt, mainly through net debt raised from the banks and from abroad.
• The balance of households' housing debt increased by about NIS 16 billion (3.7 percent) in the second quarter, as the growth rate of this debt accelerated compared with the previous quarter (2.2 percent). The increase was mainly due to an increase in the volume of new mortgages taken out from the banks.
• The balance of nonhousing debt increased by a high rate of about 2.3 percent, further to growth of about 1.1 percent in the previous quarter, reaching about NIS 201 billion. This followed a decline in the balance in 2020 in view of the COVID-19 crisis.

​

The nonfinancial business sector's outstanding debt[1]

• In the second quarter of 2021, the balance of business sector debt increased by approximately NIS 34 billion (3.4 percent), to about NIS 1 trillion. The increase was mainly due to net debt raised totaling about NIS 39 billion, of which about NIS 19 billion was in bank loans that were concentrated in the large business segment, and about NIS 18 billion was in debt raised abroad through bonds and loans. As a result, there was a high annual growth rate in the balance of business sector debt (9 percent compared with about 4 percent in the previous quarter), which was reflected in both bank debt and nonbank debt. (Figures 1 and 2).
• In the second quarter, the business sectorissued about NIS 11 billion in bonds, slightly higher than the average quarterly amount raised in the previous four quarters (about NIS 10 billion). Companies from the construction and real estate industry continue to lead issuances, and account for about half of issuances during the second quarter. In July 2021, the business sector issued bonds worth about NIS 11 billion, a significantly higher amount than the monthly average in the previous 12 months (about NIS 3.3 billion) (Figure 3).
• In the second quarter, the spread[2]between yields on corporate bonds that are included in the Tel Bond 60 index, and the yields on CPI-indexed government bonds continued to narrow, to about 1.06 percentage points. This followed the significant expansion in the first quarter of 2020 in view of the COVID crisis. In July-August 2021, the spread expanded slightly, to about 1.15 percentage points, similar to the level at the end of the first quarter of the year (Figure 4).

Household debt

• Households' outstanding debtincreased significantly in the second quarter of 2021, by about NIS 20 billion (3.3 percent) in the second quarter of 2021, to about NIS 643 billion. The increased encompassed both housing and nonhousing debt. The increase in outstanding housing debt (about NIS 16 billion) continued, and even accelerated during the quarter, to about 3.7 percent, compared with about 2.2 percent in the previous quarter. Nonhousing debt increased by a high rate of about 2.3 percent (compared with an increased of 1.1 percent in the previous quarter) to about NIS 201 billion, following a decline in 2020 in view of the COVID-19 crisis. (Figure 5).
• In the second quarter of 2021, new mortgages taken out totaled about NIS 29 billion, significantly higher than the previous quarter (about NIS 22 billion). The increase in new mortgages taken out continued, and in July 2021, new mortgages taken out totaled about NIS 12 billion (Figure 6).

Links to Data and Statistics on the Bank of Israel website:

http://www.boi.org.il/en/dataandstatistics/pages/default.aspx

http://www.boi.org.il/en/bankingsupervision/data/pages/tables.aspx?chapterid=13

http://www.boi.org.il/en/BankingSupervision/Data/Pages/Tables.aspx?ChapterId=19

http://www.boi.org.il/en/DataAndStatistics/Pages/MainPage.aspx?Level=3&Sid=74&SubjectType=2

Debt development Q2-2021.xls

[1]Israeli firms, excluding banks, credit card companies, and insurance companies.

[2]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.