TASE's board of directors decided during its meeting on Thursday (10 August 2017) to launch new series of Tel-Bond maturity indices. In total, six indices will be launched in two clusters: Tel-Bond fixed rate and Tel Bond-Shekel.
Following the launch of the new indices, TASE will calculate 20 Tel-Bond indices, eight of which have been launched this year. In total, TASE has launched 10 new indices since the beginning of the year.
Following are the new indices:
Tel-Bond CPI Linked Maturity Index Cluster
- "Tel-Bond CPI Linked 0-3 Years" - This index will include bond series, which are included in the Tel-Bond CPI Linked Index, and whose weighted time to maturity is between 0-3 years.
- "Tel-Bond CPI Linked 3-5 Years" - This index will include bond series, which are included in the Tel-Bond CPI Linked Index, whose weighted time to maturity is between 3-5 years.
- "Tel-Bond CPI Linked 5-15 Years" - This index will include bond series, which are included in the Tel-Bond CPI Linked Index, whose weighted time to maturity is between 5-15 years.
The weight limit for each bond series included in each of the indices will be 6%. A single issuer will hold no more than four bond series in each index (maximum 20% weight limit for a single issuer).
Tel-Bond Shekel Maturity Index Cluster
- "Tel-Bond Shekel 0-3 Years" - This index will include bond series, which are included in the Tel-Bond Shekel Index, and whose weighted time to maturity is between 0-3 years.
- "Tel-Bond Shekel 3-5 Years" - This index will include bond series, which are included in the Tel-Bond Shekel Index, and whose weighted time to maturity is between 3-5 years.
- "Tel-Bond Shekel 5-15 Years" - This index will include bond series, which are included in the Tel-Bond Shekel Index, and whose weighted time to maturity is between 5-15 years.
The weight limit for each bond series included in each of the indices will be 6%. A single issuer will hold no more than four bond series in each index (maximum 24% weight limit for a single issuer).
Due to the basic threshold criteria of the Tel-Bond Shekel and the Tel-Bond Fixed Rates indices, they will comprise of high rated bond series (A- to AAA). A time to maturity is calculated as the average time to maturity in each bond. This is done in accordance with the standard practice of calculating time to maturity in installment bond series.
Launching six indices with varying maturity dates meets a wide variety of investment needs:
- Strategic investors – Maturity indices are expected to comprise a fixed component in investment portfolios, in accordance with the investment policy of the debt component.
- Tactical investors – Maturity indices are expected to help extend or shorten the average duration of bond portfolios, in accordance with the varying needs and the periodic investment policy.
- Meeting varying investment needs – The sought-after maturity date might change over time. In certain periods, long-term bond portfolios are more popular, while in other periods, short-term bond portfolios are more sought-after. Launching indices with different maturity dates is expected to meet the varying market needs.
- Benchmark instruments to help managing liquidity – The new indices are expected to help investment committees determine a benchmark for managing the liquidity of the debt component in the investment portfolios.
- Risk premium assessment Instruments – The yield spread between the Tel-Bond indices and their governmental equivalents, based on their time to maturity, will provide yet another instrument for risk premium assessment of corporate bonds on the yield curve.
The new indices will be launched on 17 September 2017
The Record Date for bond inclusion in the indices will be 31 August 2017.
Appendix - Main specification of maturity indices
Following are the main figures concerning the two clusters of Tel-Bond maturity indices, based on a simulation performed on 18 July 2017:
Tel-Bond Fixed Rate Maturity Index
Period |
Market Capitalization in NIS Millions |
No. of Series |
No. of Issuers |
Large Issuer |
Weighted Maturity Date |
Duration of Bond Portfolios |
Yield |
0-3 |
52,105 |
61 |
42 |
Mizrahi
(Approx. 16%) |
2.05 |
2.05 |
0.71% |
3-5 |
40,949 |
41 |
34 |
Hapoalim
(Approx. 13.5%) |
3.78 |
3.57 |
1.16% |
5-15 |
56,744 |
47 |
28 |
Gazit Globe
(10%) |
7.23 |
6.23 |
1.71% |
Tel-Bond Shekel Maturity Index
Period |
Market Capitalization in NIS Millions |
No. of Series |
No. of Issuers |
Large Issuer |
Weighted Maturity Date |
Duration of Bond Portfolios |
Yield |
0-3 |
16,664 |
29 |
28 |
Hapoalim
(12%) |
2.00 |
1.91 |
2.15% |
3-5 |
29,197 |
48 |
45 |
Israel Electric Corp.
(Approx. 7%) |
4.16 |
3.82 |
2.72% |
5-15 |
32,480 |
38 |
29 |
Migdal
(Approx. 10%) |
7.46 |
5.79 |
2.84% |