For the first time in Israel: Bank Leumi issues covered bonds to foreign investors - at a significantly higher rating than the State of Israel and at a lower interest rate

Bank?Leumi is the first bank in Israel to issue covered bonds abroad ? an innovative debt instrument with significantly lower funding costs than standard corporate bonds. Total issuance amounted to EUR 750 million

TEL AVIV, Israel, Jan. 13, 2026 /PRNewswire/ -- Bank?Leumi (TASE: LUMI) has raised approximately EUR 750 million following the issuance of covered bonds to European investors, with record demand of approximately EUR 4.6 billion. As part of the transaction, a 5-year bond series was issued with a 0.68% margin at an annual interest rate of 3.197%. The series was rated AA- by Fitch and Aa3 by Moody's ? ratings that are two to four notches higher than those assigned to the State of Israel's most recent bond issuance (Baa1 by Moody's and A by Fitch), and at a lower interest rate by 20 points.

The issuance, led by Deputy CEO and Head of Capital Markets at Bank?Leumi, Mr. Omer Ziv, and Head of the Legal Division, Ms. Nitzan Sandor, was carried out against the backdrop of the Bank's continued growth and as part of its strategy to diversify funding sources. The transaction included underwriting by leading global financial institutions: Barclays, JPMorgan, Goldman Sachs and UBS. The bonds are expected to be listed on the institutional trading platform of the Tel Aviv Stock Exchange.

A covered bond is a financial instrument in which the bond's payments to investors are backed by a mortgage portfolio. This innovative debt instrument is widely used internationally, while Bank Leumi is the first financial institution in Israel to carry out such an issuance with foreign investors. In 2020 as well, Leumi was the first Israeli bank to issue debt to investors abroad.

The global covered bonds market is vast, with an estimated size of approximately EUR 3 trillion. Issuing this bond offers Bank Leumi several significant advantages. First, the issuance is backed by a stable and well-diversified pool of underlying assets, enabling lower funding costs compared with conventional corporate bonds. Second, it targets a broad range of foreign investors in markets that until now have had limited exposure to the Israeli banking system, such as Germany, France, Switzerland and more. For institutional investors, covered bonds provide an efficient tool for debt portfolio management, risk diversification and matching long-term liabilities.

Mr.?Hanan Friedman, CEO of Bank Leumi: "The unique issuance we led, together with record demand and the impressive ratings we received from the world's leading rating agencies, is clear evidence that Leumi is regarded as Israel's leading bank also in the eyes of foreign investors. Covered bonds are one of the most important instruments in the global debt market, and I am proud that Leumi is the first Israeli bank to lead this important step of opening the Israeli market to such issuances."

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SOURCE Bank Leumi