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Israel Bonds, the commonly known name of Development Corporation for Israel (DCI), is the U.S. underwriter of debt securities 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). Dani Naveh is president and CEO.
Bonds are sold in Canada through Canada-Israel Securities, Ltd.; in Europe through Development Company for Israel GmbH; and in the United Kingdom through Development Company for Israel, Ltd. Sales have increased steadily since the initial Independence Issue was offered in 1951, with total worldwide sales now exceeding $48 billion.
At first, investors in Israel bonds were largely members of the American Jewish community looking to support the fledgling state's economy. However, throughout subsequent years, private and institutional investors alike viewed Israel bonds as meaningful investments. 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, non-profits and synagogues. Israel uses proceeds from the sale of the bonds for general purposes of the state.[1]
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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, when the nation was critically short of economic resources.[2]
Ben-Gurion turned to Diaspora Jewry, with the goal of obtaining millions of dollars in funding by engaging them 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 Ben-Gurion shared his vision for a bond issue, which the delegates supported. The Knesset voted to launch Israel’s first bond issue in February 1951.[3] In May, the prime minister traveled to New York City to help launch the inaugural Independence Issue at a Madison Square Garden ceremony, raising $35 million.[4] Expectations for first-year sales were $25 million. Instead, final results for 1951 more than doubled projections, exceeding $52 million.[5]
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By 1957, "bond sales alone amount(ed) to an astonishing 35% of Israel's special development budget",[6] with Foreign Minister Golda Meir emphatically stating, "the central role in building our economic strength has been played by Israel bonds."
Over subsequent decades sales continued to increase, particularly in times of crisis. During 1967's Six-Day War, sales exceeded $250 million, and in 1973, the year of the Yom Kippur War, sales exceeded $500 million. In 1991, the year of the Gulf War and Iraqi missile strikes on Israel, sales exceeded $1 billion.[5] In 2020, in response to the COVID-19 pandemic, Israel Bonds approached the Finance Ministry to increase its goal for the year. The Finance Ministry approved the initiative, and the year concluded with record U.S. sales exceeding $1.5 billion.[7] In the first four weeks of the 2023 Israel-Hamas war, several U.S. states invested $300 million;[8] by November 11, 2023 a record-breaking $1 billion had been purchased by investors large and small.[9][10] (Total worldwide sales of the bonds they were first issued in 1951 had exceeded $48 billion by October 2022.)
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Initially, Israel Bonds offered a single investment option. As the program became more successful, multiple types of Israel bonds with varying maturities and purchase minimums were made available. The following bonds are/were offered in 2022:[11]
- Jubilee Bonds – fixed rate 2, 3, 5, 10 and 15-year bonds; $25,000 minimum investment.
- Maccabee Bonds – fixed rate 2, 3, 5, 10 and 15-year bonds; $5,000 minimum investment.
- Sabra Bonds – fixed rate 3-year bonds; $1,000 minimum investment. Interest is paid upon maturity.
- Mazel Tov Bonds – fixed rate 5-year bonds; $100 minimum investment. Interest is paid upon maturity.
- eMazel Tov Bonds – fixed rate 5-year bonds; $36 minimum investment. Interest is paid upon maturity. Available only online.
- Shalom Bonds - fixed rate 1 and 2-year bonds; $36 minimum investment. Interest is paid upon maturity. May only be held by a religious, charitable, literary, scientific or educational organization, contributions to which are, at the time of transfer, deductible for income and similar tax purposes. Available only online.
- Jubilee Fixed Rate Financing Bonds – 2-year bonds; minimum subscription of $100,000; must be financed through an Authorized Lender.
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.[12]
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In July 2024, an investigation by the International Consortium of Investigative Journalists (ICIJ)[13] revealed that Israel Bonds was engaged in efforts to court taxpayers' money in the form of public investments in the bonds. After the outbreak of war between Israel and Gaza on 7 October, it was reported that activists, including members of Jewish Voice for Peace, began to target the Bonds in demands that corporations and institutions divest from financial instruments that appear to support the government of Israel.[14] According to Richard Painter, who worked as chief White House ethics lawyer during the George W. Bush administration, the mixing of personal and official practices evidenced in transcripts of email documents exchanged to secure bond purchases in the U.S. appears to "go well beyond what’s seen as acceptable."[14] Michael Frerichs, the Illinois treasurer stated: "We have been purchasing these Israel bonds for over 20 years. We get a good return, and so we were open to more purchases. But after the Hamas attack on Israel, we figure that they would be issuing more bonds. And we also wanted to show our support for an ally at a time of a terrorist invasion."
These issues came to play a role in Pennsylvania's 2024 treasurer race between Stacy Garrity and Erin McClelland. In October 2023, Pennsylvania State Treasurer Stacy Garrity purchased $20 million in Israel Bonds, bringing Pennsylvania's investment in Israel Bonds to a total of $56 million.[15] Erin McClelland, Garrity’s opponent in the November general election, said that she did not believe that the state should invest in foreign bonds, particularly when it meant taking sides in an overseas conflict.[16][17]
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- Michael Arnon: 1974 to 1979 - The first Israeli in the role
- ?–1979: Yitzhak Rager
- 1979–1985: Yehuda Halevi
- 1989–1994: Meir Rosen
- 1994–1997: Nathan Sharoni
- 1997–2002: Gideon Pat
- 2002–2011: Yehoshua Matza
- 2011–2016: Israel Tapuchi[18]
- 2016–2021: Israel Maimon
- 2021–Present: Danny Naveh
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