Evolution of debt in the non-financial private sector, second quarter 2021

The following is a summary of developments in private non-financial sector debt in the second quarter of 2021:
  • In the second quarter of 2021, the corporate sector debt balance increased by about NIS 34 billion (3.4 percent), mostly on net debt raised from banks and overseas.
  • The balance of household housing debt increased by about 16 billion shekels (3.7%) in the second quarter, the growth rate of this debt having accelerated compared to the previous quarter (2.2%). The increase is mainly due to an increase in the volume of new mortgages taken out from banks.
  • The balance of debt excluding housing increased by a high rate of around 2.3 percent, following growth of around 1.1 percent in the previous quarter, reaching around NIS 201 billion. This follows a drop in the balance in 2020 due to the COVID-19 crisis.

The outstanding debt of the non-financial corporate sector[1]

  • In the second quarter of 2021, the corporate sector debt balance increased by about NIS 34 billion (3.4 percent), to about NIS 1,000 billion. The increase is mainly due to net debt raised totaling around NIS 39 billion, of which around NIS 19 billion was in the form of bank loans concentrated in the large business segment, and approximately NIS 18 billion under form of debt incurred abroad through bonds and loans. As a result, the corporate sector debt balance experienced a high annual growth rate (9% compared to around 4% in the previous quarter), which was reflected in both bank and non-bank debt. (Illustrations 1 and 2).
  • In the second trimester, the activity areaPosted about NIS 11 billion in bonds, slightly higher than the average quarterly amount raised over the previous four quarters (about NIS 10 billion). Companies in the construction and real estate sectors continue to dominate emissions, accounting for about half of emissions in the second quarter. In July 2021, the corporate sector issued bonds worth around NIS 11 billion, significantly higher than the monthly average for the previous 12 months (around NIS 3.3 billion) (Chart 3).
  • In the second trimester, the propagation[2]between the yields of corporate bonds included in the Tel Bond 60 index and the yields of government bonds indexed to the CPI continued to shrink, to around 1.06 percentage point. This follows the significant expansion in the first quarter of 2020 due to the COVID crisis. In July-August 2021, the gap widened slightly, to around 1.15 percentage points, similar to the level at the end of the first quarter of the year (graph 4).

Household debt

  • Outstanding household debtincreased significantly in the second quarter of 2021, from around NIS 20 billion (3.3 percent) in the second quarter of 2021, to around NIS 643 billion. The increase included both housing-related debt and non-housing debt. The increase in outstandings housing debt (around NIS 16 billion) continued, if not accelerated in the quarter, to around 3.7%, compared to around 2.2% in the previous quarter. Non-housingg of debt rose from a high rate of around 2.3% (up from a 1.1% increase in the previous quarter) to around NIS 201 billion, following a decline in 2020 due to the COVID-19 crisis. (Illustration 5).
  • In the second quarter of 2021, new mortgages taken out totaled around NIS 29 billion, significantly more than in the previous quarter (around NIS 22 billion). The increase in new mortgages written continued, and as of July 2021, new mortgages written totaled around NIS 12 billion (Chart 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 businesses, excluding banks, credit card companies and insurance companies.

[2]The variation in the spread from one quarter to another is calculated as the difference between the average spread for the last month of the quarter under review and the average spread for the last month of the previous quarter.

Disclaimer

Bank of Israel published this content on September 30, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 02 October 2021 17:37:02 UTC.

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