Bank of Israel reports nonfinancial private sector debt rose 2.1 percent in Q2 2025 to NIS 2.3 trillion

The Bank of Israel published its second quarter 2025 update on debt developments in Israel’s nonfinancial private sector, showing total outstanding business and household debt increased by about 2.1 percent to NIS 2.3 trillion, lifting the annual growth rate to around 8.2 percent. Business sector debt rose about 2.6 percent, or roughly NIS 36 billion, to about NIS 1.5 trillion, mainly reflecting net debt raised of NIS 58 billion driven largely by bank credit, including credit extended primarily to the financial services sector for collateral in derivative and securities lending transactions. Tradable bond issuance in Israel and a 1.3 percent rise in the Consumer Price Index added to the balance, partly offset by a 9.3 percent appreciation of the shekel against the dollar and net redemptions of foreign and nontradable domestic debt. Bank debt’s annual growth rate increased to about 16 percent, while nonbank lender debt growth slowed to about 0.5 percent from 3.5 percent. Household debt increased to about NIS 866 billion as housing debt rose by around NIS 12 billion, or 2 percent, on higher new mortgage volumes from banks, while nonhousing debt fell by about NIS 1.4 billion, or 0.6 percent, to NIS 236 billion for the first time since the last quarter of 2023 due to declines in bank and credit card borrowing. Corporate bond market indicators also shifted, with business bond issuance of about NIS 28 billion in Q2, including 43 percent by real estate and construction firms, and the Tel Bond 60 corporate spread over CPI-indexed government bonds narrowing to about 0.83 percentage points in Q2, falling further to about 0.77 percentage points in July before edging up to about 0.79 percentage points in August.