Israel's Mizrahi Tefahot Bank raises $1.3 billion in bond offering

JERUSALEM, July 16 (Reuters) - Mizrahi Tefahot , Israel's third-largest bank, said on Wednesday it raised 4.5 billion shekels ($1.3 billion) in a bond offering to institutional investors.

The bank initially had planned on raising 2.3 billion shekels in debt through three instruments - a new commercial paper series, an expansion of a shekel-denominated series and an expansion of an inflation-linked subordinated notes series.

It noted that when demand had reached 5.9 billion shekels, it opted to increase the amount raised.

Shekel bonds will pay 0.4 percentage points over comparable Israeli government bonds, while the spread for inflation-linked debt will be 0.95 percentage points. The spread for its commercial paper is negligible over the Bank of Israel rate.

"The strong interest from institutional investors reflects the high level of trust the bank enjoys in the capital markets, as well as its broad access to relatively cheap and readily available funding sources for its various needs," said CEO Moshe Lari. ($1 = 3.3575 shekels) (Reporting by Steven Scheer; Editing by Emelia Sithole-Matarise)