For the first time in Israel: Bank Leumi issues covered bonds to foreign investors - at a significantly higher rating than the State of Israel and at a lower interest rate

Rhea-AI Summary

Bank Leumi (OTC:BLMIF) on Jan 13, 2026 completed a EUR 750 million covered bond issuance to European investors, after record demand of ~EUR 4.6 billion. A 5-year series carries a 0.68% margin and an annual interest rate of 3.197%. Fitch rated the series AA- and Moody's Aa3, described as two–four notches higher than recent State of Israel long-term ratings (Fitch A; Moody's Baa1). The bonds were underwritten by Barclays, JPMorgan, Goldman Sachs and UBS and are expected to list on the Tel Aviv Stock Exchange institutional platform. Leumi said the covered bonds are backed by a mortgage portfolio and aim to diversify funding and lower funding costs.

Positive

• Issuance size EUR 750 million
• Record demand ~EUR 4.6 billion
• 5-year coupon annual interest 3.197% with 0.68% margin
• High ratings Fitch AA- and Moody's Aa3 (two–four notches above State ratings)
• Underwritten by Barclays, JPMorgan, Goldman Sachs, UBS
• Listing expected on Tel Aviv Stock Exchange institutional platform

Negative

• None.

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On the day this news was published, BLMIF declined NaN%, reflecting a moderate negative market reaction.

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Bank Leumi is the first bank in Israel to issue covered bonds abroad – an innovative debt instrument with significantly lower funding costs than standard corporate bonds. Total issuance amounted to EUR 750 million

TEL AVIV, Israel, Jan. 13, 2026 /PRNewswire/ -- Bank Leumi (TASE: LUMI) has raised approximately EUR 750 million following the issuance of covered bonds to European investors, with record demand of approximately EUR 4.6 billion. As part of the transaction, a 5-year bond series was issued with a 0.68% margin at an annual interest rate of 3.197%. The series was rated AA- by Fitch and Aa3 by Moody's – ratings that are two to four notches higher than those assigned to the State of Israel's most recent bond issuance (Baa1 by Moody's and A by Fitch), and at a lower interest rate by 20 points.

The issuance, led by Deputy CEO and Head of Capital Markets at Bank Leumi, Mr. Omer Ziv, and Head of the Legal Division, Ms. Nitzan Sandor, was carried out against the backdrop of the Bank's continued growth and as part of its strategy to diversify funding sources. The transaction included underwriting by leading global financial institutions: Barclays, JPMorgan, Goldman Sachs and UBS. The bonds are expected to be listed on the institutional trading platform of the Tel Aviv Stock Exchange.

A covered bond is a financial instrument in which the bond's payments to investors are backed by a mortgage portfolio. This innovative debt instrument is widely used internationally, while Bank Leumi is the first financial institution in Israel to carry out such an issuance with foreign investors. In 2020 as well, Leumi was the first Israeli bank to issue debt to investors abroad.

The global covered bonds market is vast, with an estimated size of approximately EUR 3 trillion. Issuing this bond offers Bank Leumi several significant advantages. First, the issuance is backed by a stable and well-diversified pool of underlying assets, enabling lower funding costs compared with conventional corporate bonds. Second, it targets a broad range of foreign investors in markets that until now have had limited exposure to the Israeli banking system, such as Germany, France, Switzerland and more. For institutional investors, covered bonds provide an efficient tool for debt portfolio management, risk diversification and matching long-term liabilities.

Mr. Hanan Friedman, CEO of Bank Leumi: "The unique issuance we led, together with record demand and the impressive ratings we received from the world's leading rating agencies, is clear evidence that Leumi is regarded as Israel's leading bank also in the eyes of foreign investors. Covered bonds are one of the most important instruments in the global debt market, and I am proud that Leumi is the first Israeli bank to lead this important step of opening the Israeli market to such issuances."

FAQ

What did Bank Leumi announce on Jan 13, 2026 regarding covered bonds (BLMIF)?

Bank Leumi issued EUR 750 million of covered bonds to European investors with ~EUR 4.6 billion demand.

What are the terms of Bank Leumi's 5-year covered bond (BLMIF)?

The 5-year series carries a 0.68% margin and an annual interest rate of 3.197%.

What credit ratings did Bank Leumi's covered bonds receive on Jan 13, 2026?

The series was rated AA- by Fitch and Aa3 by Moody's.

How did Bank Leumi's covered bond ratings compare to the State of Israel (BLMIF)?

The covered bond ratings were described as two–four notches higher than the State of Israel's recent ratings (Fitch A; Moody's Baa1).

Which banks underwrote Bank Leumi's Jan 2026 covered bond offering (BLMIF)?

The deal was underwritten by Barclays, JPMorgan, Goldman Sachs and UBS.

Will Bank Leumi's covered bonds be tradable on an exchange (BLMIF)?

Yes, the bonds are expected to be listed on the Tel Aviv Stock Exchange institutional trading platform.