Israel Bonds (Ofer Abarbanel online library)

Israel Bonds is the commonly known name of Development Corporation for Israel (DCI), the U.S. underwriter of debt securities (Israel bonds) issued by the State of Israel. DCI is headquartered in New York City, and is a broker-dealer and member of the Financial Industry Regulatory Authority (FINRA). Israel Maimon became the organization’s president & CEO in October 2016.

The sale of Israel bonds is global in scope. In addition to the United States, bonds are sold in Canada through Canada-Israel Securities, Ltd., and Europe through Development Company for Israel (UK) Ltd. Sales have increased steadily since the initial Independence Issue was offered in 1951, with total worldwide sales approaching $40 billion. In 2013, U.S. Israel bond sales surpassed $1.12 billion, the first time domestic sales exceeded the $1 billion mark. Sales again exceeded $1 billion in 2014 and 2015.

In the fall of 2011, Israel Bonds launched an eCommerce site to facilitate investing in Israel bonds online. As of 2016, investments made via the online site have exceeded $130 million, owned by 55,000 bondholders around the world.[1]


1950 to 1951

The idea to float bonds issued by Israel’s government was conceived by Israel’s first prime minister, David Ben-Gurion, in the aftermath of Israel’s War of Independence. The war had taken a terrible toll in casualties (more than 1% of the country’s population was killed),[citation needed] and the nation’s fledgling economy was devastated. Compounding the dire situation, Israel faced unique economic demands, especially the arrival of hundreds of thousands of immigrants from post World War II Europe and the Middle East.

Short on economic resources, Israel suffered food shortages and imposed rationing, and new arrivals had to be housed in primitive shelters.[2]

With the country financially overwhelmed, Ben-Gurion turned to the Diaspora community for help. Ben-Gurion’s goals were two-fold: to obtain millions of dollars in funding for immigrant absorption and the construction of national infrastructure, and to engage Diaspora Jewry as active partners in building the new Jewish state. In September 1950, he convened a meeting of American Jewish leaders at Jerusalem’s King David Hotel, where he proposed issuing bonds to help provide Israel with a more secure economic foundation. The American Jewish leaders supported Ben-Gurion’s plan and, the following spring, the prime minister traveled to New York City to help launch the inaugural Independence Issue at a Madison Square Garden ceremony. Expectations for first-year sales were $25 million. Instead, final results for 1951 more than doubled projections, exceeding $52 million.

1952 to 1966

The new organization increasingly expanded operations throughout the US and Canada, providing proceeds utilized to help fund projects in Israel’s industrial and agricultural sectors, including the Dead Sea Works and National Water Carrier.

Within six years, according to an article in the January 21, 1957, issue of Time magazine, “bond sales alone amount(ed) to an astonishing 35% of Israel’s special development budget.” The article quoted Foreign Minister Golda Meir, who emphatically stated, “the central role in building our economic strength has been played by Israel bonds.”[3]

1967 to 1992

Over subsequent decades, sales continued to increase, particularly in times of crisis. During 1967’s Six-Day War, sales exceeded $250 million, a total that more than doubled during the Yom Kippur War of 1973. From the mid-1980s to 1992, the bonds were the primary way the Israeli government obtained external funding.[4] In 1991, the year of the Persian Gulf War and Iraqi missile strikes on Israel, annual worldwide sales broke the $1 billion threshold.

1993 to Present

Annual worldwide sales remained at $1 billion or above as Israel bonds became increasingly viewed not only as a means of supporting Israel, but as a useful financial investment as well, particularly for pension funds.

In 2004, the Bank of Israel issued a report “to describe the activity of the Israel Bonds organization over the past fifty years and to summarize changes that have taken place in the products the organization offers with respect to quantities, types of bonds and recruitment costs.” In doing so, the report noted, “an analysis of the sale of bonds indicates an increase in sales from one decade to the next.” It also observed that the Bonds organization has been market-responsive over the years, “so that each bond addressed a different target audience: individuals, communities (and) financial bodies.” The report concluded that Israel Bonds is “a uniquely Israeli establishment, and no other countries have a similar organization.” It stated that “(when) Israel has found it difficult to raise high sums of external debt, Israel Bonds has shown itself to be capable of reacting quickly to increased needs for foreign currency.”[5]

In fall 2011, the organization launched its e-commerce site.

In 2013, U.S. sales exceeded $1.1 billion, the first time domestic sales crossed the $1 billion threshold. That achievement was realized in 2014 and again in 2015.

In June 2016, the Bonds organization launched a new initiative to counter anti-Israel activism on campus. Entitled “The Alternative BDS – Bonds Donated to Schools,” the program encourages donations of Israel bonds to universities.


Initially, Israel Bonds offered one security. As the program became increasingly successful, multiple investment options were made available. The following bonds are currently offered:[6]

  • Jubilee Issue Bonds – fixed rate 2, 3, 5 and 10-year bonds; $25,000 minimum investment and increments of $5,000. Interest is paid semi-annually on May 1 and November 1.
  • Maccabee Issue Bonds – fixed rate 2, 3 and 5-year bonds; $5,000 minimum investment and increments of $500 . Interest is paid semi-annually on May 1 and November 1.
  • Sabra Savings Bonds – fixed rate 3-year bonds; $1,000 minimum investment and increments of $100. Interest paid upon maturity.
  • Mazel Tov Bonds – fixed rate 5-year bonds; $100 minimum investment and increments of $10, limited to $2500 per month for each purchaser and holder. Interest paid upon maturity.
  • eMitzvah Bonds – fixed rate 5-year bonds; $36 minimum investment and increments of $18. Maximum allowable amount purchased by one person in a transaction, registered in the name of one holder, is $90. Interest paid upon maturity. May only be purchased online.
  • Floating Rate LIBOR Bonds – variable rate 2, 3 and 5-year bonds; $5,000 minimum investment and increments of $500; interest paid semi-annually on June 1 and December 1.

Rates change two times per month on most Israel bonds. Interest for fixed rate bonds is based on prevailing Treasury bond rates, plus a spread. Rates for floating rate bonds are equal to the 6-month LIBOR rate in effect on the initial determination date, plus or minus a spread that remains fixed until maturity.

Although Israel has never defaulted in the payment of principal or interest on any of its internal or external debt, prospective purchasers are warned of sovereign credit risk.[7]

Investor Diversity

Initially, investors in Israel bonds were largely members of the Jewish community who wanted to help Israel. However, as offerings began featuring multiple rate and maturity options, the investor base became increasingly diversified. Private and institutional investors alike viewed Israel bonds as a significant means of strengthening portfolios in addition to supporting Israel. Over 90 U.S. state and municipal pension and treasury funds have invested more than $3 billion in Israel bonds to date.

Other investors in Israel bonds include corporations, insurance companies, associations, unions, banks, financial institutions, universities, foundations and synagogues.

According to the prospectus, Israel uses the net proceeds from the sale of the bonds for general purposes of the state.[8]


  1. ^“Online Sales Exceed $130 Million”. 18 December 2016. Retrieved 5 February 2017.
  2. ^“IsraelUKbonds – About Us”. Development Company for Israel (UK) Ltd. Retrieved May 23, 2014.
  3. ^“Organizations: Dollars for Israel”. Time. January 21, 1957.
  4. ^“Annual Report on Form 18-K to the U.S. Securities and Exchange Commission”. State of Israel. July 1, 2002. Retrieved May 23, 2014.
  5. ^Rehavi, Yehiel; Weingarten, Asher (September 6, 2004). “Fifty Years of External Finance via State of Israel Non-Negotiable Bonds”. Bank of Israel. Archived from the original on February 2, 2007. Retrieved May 23, 2014.
  6. ^“Israel Bonds: Current Rates”. Development Corporation for Israel. Retrieved May 23, 2014.
  7. ^“Risk Factors – Bondsisrael”. Retrieved 5 February 2017.
  8. ^State Israel Bonds prospectus


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