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"I CANNOT IMAGINE
THE ISRAEL ECONOMY
WITHOUT ISRAEL BONDS"

ISRAEL FINANCE MINISTER
MOSHE NISSIM

—London, April. 1988

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Then, for your children
or grandchildren,
buy an additional Israel
Bond

11.6 4 not an oflaina The casting ccr, be mode

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Part investment,
part charity,
part statement
of solidarity,
Israel Bonds
are unique among
financial instruments

Invest in an individual
Variable Rate (7W!,? Bond
and receive an
attractive, prime-related
interest rate.

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4,71

10,

eW1• 1/ 71%//// .

PRIME MINISTER

MINISTER OF FINANCE

I'. MM.

Jews because nobody else thought
Israel would last long enough to pay
them back. It wasn't until 1967, the
Six-Day War, that the general public
was confident enough to start in-
vesting."
Many institutional and corporate
investors, including the State of
Michigan, are being attracted to some
of the high-ticket investments offered
by Israel Bonds. For example, a
$25,000 variable-rate bond that yields
a rate halfway between 7.5 percent
and the prime is popular with
employee benefit plans. The bond has
a 12-year maturity, but a pension
fund has the right of redemption after
three years on 120 days notice.
Also available is a 7-year,
$250,000 note that pays the prime
rate minus .5 percent, and a 5-year,
$1 million note that pays the same.
These high-ticket investments are
a sign of the evolving sophistication
of the Israel Bonds effort and a
gradual shift in emphasis. While still
playing to the sympathies of U.S. Jews
for individual sales, Bond officials are
making a concerted effort to tap non-
Jewish investors who are more likely
to invest with their head rather than
their heart.
Non Jews now account for an
estimated 30 percent of Bond sales in
dollar terms. Among the institutional
buyers of Israel Bonds are H.J. Heinz,
Hartz Mountain Corp., the Los
Angeles County Employees Retire-
ment Association, the State of
Michigan's retirement fund, and
numerous banks and insurance com-
panies. All individual buyers are
classified as Jewish ("If they aren't
they should be," quipped the Bonds
professional).
The $1 million note was started in
1975, followed by the variable-rate
bond in 1980.
Purchase of an Israel Bond,
however, is still different from buying
its equivalent from Britain, France or
Japan. About three-quarters of Israel
Bonds (by dollar amount) are sold in

the U.S., whereas other countries
market their bonds domestically.
Unlike investments in other coun-
tries' bonds, Israel's have virtually no
secondary market. Unless otherwise
specified, the bonds must be kept to
maturity, when they can be
redeemed.
Thus far, only a few dealers pur-
chase small denomination Israel
Bonds on a limited basis. Jerusalem,
meanwhile, has steered clear of
creating a viable secondary market.
In a Jerusalem Post article last
month, David Krivine suggested that
given Israel's always precarious
political situation, a sensitive secon-
dary market would be about as stable
as a live volcano, with each new
political wrinkle or border incident
sending prices on a roller coaster ride.
Even after maturity, the bonds
can have liquidity problems. A New
York writer found a $100 bond that
her now-deceased parents bought in
1967. The bond had reached maturi-
ty in 1979 and she started trying to
redeem it in 1987. Since the bond was
in her parents' names, "bond
authorities demanded that she prove
her parents were dead. She provided
the death certificates. Later came re-
quests for a notarized certificate of
domicile, then fiduciary's probate cer-
tificate, then a waiver of inheritance
tax form on her mother's estate. Since
she couldn't provide the inheritance
tax form (since the estate had ex-
pired), she has written off ever seeing
the proceeds frm the bond. "It came
not to be worth the money;' she said.
"I decided it was a gift to Israel. I'm
not really mad because it's a dona-
tion?' Regardless of any liquidity pro-
blems, however, the primary market
has remained remarkably stable, ac-
cording to top Israel Bonds managers.
Rosenbaum, said that in wartime;
bond sales rise markedly in the
Jewish community. Negative publici-
ty related to the Palestinian intifada
(uprising) has failed to make a dent
in bond sales, Rosenbaum said, with

THE DETROIT JEWISH NEWS

27