Facing a constant barrage of rockets from Hamas militants in Gaza for more than a week, Israel’s economy is proving just as dependable during the crisis as the much acclaimed Iron Dome system, helped in part by capital investments made internationally through the work of organizations like Israel Bonds.
Israel Bonds, a product of the American-run brokerage and retail firm Development Corporation for Israel, has long been a financial help for Israel’s economy.
Now, it is increasingly being seen by both individual and institutional investors as a sound investment, not a charitable gift – on par with or better than sovereign debt securities of other well-known, financially stable countries such as the United States, Canada, Australia and the European Union.
Israel’s dynamic economy and excellent credit rating – rated A+, or stable, by Standard & Poor’s in 2011 – has made even non-Jewish investors take notice, leading to vastly improved sales of Israel Bonds over the past couple of years.
“At the end of the day, we’re a brokerage firm with a Jewish heart,” said Izzy Tapoohi, president and chief executive officer of Israel Bonds. “Yes, we do have a Jewish community backing us and investing, knowing that it’s a good investment. But we shouldn’t forget that, at the end of the day, if there was a crisis in Israel and we were sitting in bomb shelters, the only place that Israel can go to insure that its economy would survive would be to come to Israel Bonds.”
Israel Bonds is constantly working in the market, regardless of whether there is a crisis, to impress on investors the new face of the Israeli economy, and subsequently its bonds appeal to younger investors who are more interested in making a good, secure, diversified investment than in the traditional pull of patriotism and sentimentality – though belief in Israel is still a motive for investment.
“If you look at the older generation, obviously even if they got negative 30 percent, they would be investing in Israel Bonds [anyway] and in Israel,” Tapoohi said. “When you look at the younger generation … the demographic is 35, 45, 55” – they see that it is a good investment, with reasonable return, with the principle and interest always paid on time, he added.
Israel Bonds on June 2 received its largest single investment ever when the state of Ohio, led by Josh Mandel, its 36-year-old Jewish state treasurer, completed a $47.8 million investment. This sum, added to the $42 million investment the state legislature made in 2013, and the state’s previous investments, brings that state’s total Israel Bond holdings to $105 million.
“This purchase is consistent with our strategy of making sound investments that prioritize the safety and security of Ohioans’ hard-earned dollars,” Mandel told the Cleveland Jewish News.
“Just four years ago, Ohio’s fiscal condition was ranked 43rd in the nation – and today we’re ranked seventh. This improvement in Ohio’s financial health has been a team effort, and I’m proud to be doing our part from the state treasurer’s office.”
Mandel’s move was supported by the state legislature and is the largest holding by any state. Despite the instability in the Middle East, Israel Bonds’ past three years have been good.
A record was set last year when the total annual domestic bond sales topped $1 billion, “refuting the perception that Israel Bonds only sell well in times of crisis,” a company fact sheet mentioned.
As an investment firm, Israel Bonds has tried to shed its image as a charity, not wanting to take money away from actual charities and looking to be taken seriously by major investors.
Stuart Garawitz, corporate vice president and head of national sales at Israel Bonds, said a critical part of this move was modernization of its business model.
“For the first time ever, you were able to buy bonds online, and last year we sold $25 million of bonds online when three years ago it was zero,” said Garawitz. “Zero to $25 million is pretty amazing.”
@dmitriyshapiro
JNS.org contributed to this story.
