On July 20th, 2017, The Tel Aviv Stock Exchange (TASE) Board of Directors approved the launch of a new Fixed Income index, the Tel Bond Shekel-50. The index will consist of the top 50 bond series issued by Israeli companies (incorporated in Israel) or by foreign companies with strong Israeli orientation (as determined by the Index Committee), which are included in the Tel Bond Shekel index.
TASE held meetings with capital market activists, which made it realized there is a growing demand for a premium Tel-Bond index consisting of large Shekel bond series that were issued by companies, which were incorporated in Israel or by foreign companies with Israeli orientation traded on TASE. The Tel Bond Shekel-50 Index will be comprised of high rated bond series in accordance with the ranking criterion of bonds included in the Tel-Bond Shekel Index (A-to AAA).
The Tel Bond Shekel-50 Index applies a broad diversification criterion. The weight limit for each bond series will be 3% and single issuer will hold no more than three bonds in the index (meaning a maximum 9% weight limit for a single issuer).
The index provides a benchmark for solid investments portfolio. It will be especially relevant for low-risk investors interested in a deep and broad index, as well as to institutional investors, interested in highly liquid and large Shekel bond series.
The index is expected to enjoy high demand from investors interested in investing in the Tel Bond Shekel index, which does not include foreign bonds. The foreign bonds' weight in the current Tel Bond Shekel index is approx. 20%, and is currently on the rise. A Shekel index that will only consist of Israeli bonds will meet the needs of investors looking to eliminate the dependency in the foreign bonds' weight in the index.
Assets tracking the leading benchmark indices such as Tel Bond Shekel, Tel Bond-20 and Tel Bond-60 enjoying high demand among investors. With an investments scope of approx. NIS 9bn, Tel Bond Shekel is the most popular index among the Tel Bond indices. Following the Tel Bond-Shekel is the Tel Bond-20 with approx. NIS 8.5bn, and the Tel Bond-60 that crossed the NIS 7bn mark.
According to a TASE simulation, the index's market capitalization as of the beginning of July is approx. NIS 51.3bn. The index includes 38 issuers and the weight of the largest issuer (Mizrahi) is 9%. The index's gross internal yield is approx. 2.23% and the average duration is about 4.5 years.
The index will be launched on Aug 20th, 2017. The Record Date for bonds inclusion in the index will be Aug 10th, 2017, at the end of the closing session.