Editor’s note: This is general educational information about how corporate bonds are rated and traded in Israel, based on the official filings and reports listed at the end. It is not investment advice and is not a view on any bond mentioned.
Analysis: the rating answers one question, the price answers three
A careful reader should treat a rating and a traded yield as answers to different questions rather than as two measurements of the same thing. The rating agencies are asked whether the issuer will pay on time. The market is asked that question plus two more: what the money is worth over the remaining life of the bond, given the level and shape of shekel interest rates, and what a buyer must be paid for accepting a position that may be difficult to exit. Only the first of those three is inside the rating.
The gap can be quantified in a rough way from a company’s own accounts. ICL reports the fair value of its non marketable debentures by discounting the contractual cash flows, and the average discount rate it applied was 6.0 percent as of December 31, 2025 against 6.7 percent a year earlier. Marketable debentures are valued instead at the quoted exchange price. Two instruments issued by one borrower, with one set of ratings, are therefore carried on different bases because one has a screen price and the other does not, which is the clearest illustration available of how much of a bond’s valuation sits outside the credit opinion.
What the documents cited here establish is limited and worth stating precisely. They show a market that issues heavily, trades lightly relative to what it issues, and rates its borrowers on two scales that are not interchangeable. They do not establish what any individual series is worth, and they do not support inferring a fair yield from a letter grade. A reader following this market would watch the ratio of turnover to issuance rather than the ratio of one year’s issuance to the last, since a market that keeps adding series without adding daily volume is a market in which the average bond is held rather than traded.
What the documents say
The same company can hold two credit ratings at once that appear to contradict each other. ICL Group, one of the larger Israeli issuers of shekel debt, had its Series G debentures rated ilAA by Standard and Poor’s Maalot in 2025, and in the same year had its international credit rating and senior unsecured rating reaffirmed at BBB- by S&P, with Fitch Ratings reaffirming a long term issuer default rating of BBB- as well. Nothing changed in the balance sheet between those two opinions. What changed was the yardstick. Reading a Tel Aviv corporate bond means keeping both yardsticks straight, and then understanding why a bond carrying a strong grade on either of them can still go a session without trading.
Two scales, one issuer
A national scale rating ranks an issuer against other issuers in the same country. The lowercase country prefix on the ICL grade, il for Israel, is the signal that the letter belongs to that domestic ladder and not to the global one. Because the ranking is relative to a single market, the top of a national scale is occupied by the strongest local credits, and the distance between a national grade and an international grade for the same borrower reflects the sovereign and currency environment that every domestic issuer shares rather than anything specific to the company.
The practical consequence shows up when the two ratings are used for different purposes. A domestic institutional mandate written against a national scale reads ilAA as high grade. A cross border lender pricing the same company against issuers in other countries reads BBB- as the lowest rung of investment grade. Both are opinions about the likelihood of timely payment, both are paid for by the issuer, and neither is a statement about the share price or the business strategy. A rating is also revisited: the ICL grades cited here were reaffirmations, which is the routine outcome of a periodic review rather than a new judgment.
What the market actually issues
The scale of the Tel Aviv corporate debt market is easy to underestimate from the equity side. The Tel Aviv Stock Exchange is the sole authorised stock exchange and public securities market in Israel, regulated by the Israel Securities Authority, and as of December 31, 2025 it comprised 25 members with 546 companies maintaining an equity listing. Equities, convertibles, treasury bills, government and corporate bonds, structured products, exchange traded notes and derivatives all trade through the same fully automated Tel Aviv Continuous Trading system.
In 2025 the corporate bond market recorded total issuance of $58.62 billion, against $6.58 billion of equity capital raised in a year that saw 21 companies complete initial offerings. Thirty new companies entered the public debt market during the year, raising a combined $1.97 billion between them. Set those figures side by side and the ordering is clear: Israeli companies raise far more through listed debt than through listed equity, and the debt market admits new borrowers steadily rather than in the bursts that characterise the initial offering calendar.
Individual issues are correspondingly chunky. ICL expanded its Series G debentures in May 2025 by NIS 850 million, roughly $236 million, taking the outstanding principal of that single series to NIS 1,570 million, roughly $436 million. In December 2025 it repaid NIS 33 million of the series on schedule, about $10 million, and in January 2026 it repaid a $46 million private placement bond, also on schedule. A series of that size is a standing obligation with a published amortisation calendar, not a position that turns over.
Why the trading data looks thin next to the issuance data
Average daily trading volume in Israeli corporate bonds, including structured bonds and exchange traded funds, was $0.37 billion in 2025, up 24 percent on 2024. Government bonds averaged $1.029 billion a day over the same year, an increase of 11.8 percent. So a corporate bond market that issued $58.62 billion during the year turned over less than a third as much per day as the government bond market above it, and the government market is a fraction of the size of the equity market by turnover on an active day.
That pattern is not particular to Tel Aviv. The Committee on the Global Financial System, reporting through the Bank for International Settlements, found fixed income markets in a state of transition in which dealers have continued to cut back their market making capacity in many jurisdictions while demand for market making services continues to grow. The report’s judgment was that the effect had so far shown up not in the price of immediacy services but in more fragile liquidity conditions, and it named electronic trading, dealer deleveraging reinforced by regulatory reform, and unconventional monetary policy as the drivers.
Applied to a shekel corporate bond, the mechanism is straightforward. A bond bought by a pension fund or an insurer to match a long dated liability is not intended to be sold, so the free supply available to any buyer on a given day is a small slice of a large series. A bond series is also a specific contract, with its own maturity, coupon, covenants and indexation terms, so buyers cannot substitute one series for another the way they substitute one lot of a listed share for another lot of the same share.
