#Israel #Tel Aviv #Financial Growth #Bank Leumi #CoCo Bonds

Bank Leumi's Major CoCo Bond Issuance

Bank Leumi (TASE: LUMI), one of Israel's leading banks, recently achieved a significant milestone by completing an international issuance of Contingent Convertible bonds (CoCo bonds) totaling USD 1 billion. This transaction marks a historic event for the bank as it boasts the lowest spread ever recorded in the history of Israeli bank CoCo bond issuances. The raised capital reflects not only the bank’s robust market position but also the confidence that both local and international investors have in the Israeli economy.

The demand for these CoCo bonds was exceptional, with offers amounting to approximately USD 2.5 billion—over two times the amount issued. Such enthusiastic investor interest underscores the positive outlook for Bank Leumi’s future growth and stability. The bonds come with a term of 10.25 years and include a call option after five years, featuring an interest rate of 5.7% and a spread of 155 basis points. These favorable terms illustrate the bank's solid standing in the financial markets.

CoCo bonds serve a dual purpose, combining elements of both debt and equity. They are designed to bolster the bank's capital base, providing greater financial security and resilience. This strategic move was spearheaded by Omer Ziv, the Deputy CEO and Head of the Capital Markets Division, and it's part of a broader initiative to enhance funding diversity and strengthen capital reserves.

The prominent role of major global investment banks such as Goldman Sachs, J.P. Morgan, Citibank, and Deutsche Bank in this issuance further demonstrates the high level of trust and interest from key financial players around the world. Following the issuance, the series of bonds is set to be listed on the Tel Aviv Stock Exchange, providing further liquidity and trade opportunities for investors.

This successful CoCo bond issuance follows another significant achievement in January 2026, when Bank Leumi was the first financial institution in Israel to secure a mortgage-backed covered bond from foreign investors. This innovative financial instrument had lower financing costs compared to regular corporate bonds, illustrating the bank's commitment to exploring attractive funding options.

The positive momentum of Bank Leumi's growth trajectory is further evidenced by its recent financial success, which positions it as a leader in the financial services landscape. As the global economy continues to evolve, Bank Leumi's adaptability and strategic financial initiatives will likely keep it at the forefront of innovation and investor confidence in Israel and beyond.

In conclusion, Bank Leumi's historic CoCo bond issuance is not just a reflection of its current successes but also a testament to the bank’s robust management strategies and optimistic future outlook. The backing from international investors signifies a strong endorsement of Bank Leumi's practices and reinforces its status as a pillar of stability within the dynamic Israeli banking sector. As it continues to explore new funding avenues and strengthen its capital position, Bank Leumi is set to remain a key player in the international financial arena.