Document Type

Case Study

Case Series

Market Support Programs

JEL Codes

G01, G28


By March 2020, the quickly spreading novel coronavirus began disrupting business activity and industry, generating uncertainty throughout the global economy. As financial panic spread, Israeli investors fled to liquidity, impacting equities, corporate bonds, and even Israeli treasury securities. As short-term horizon mutual funds experienced high withdrawals in the first few weeks of March, they were forced to sell corporate bonds. This increase in supply pushed corporate bond prices down, and yields spiked. Between March and May, domestic rating agencies downgraded 23 companies (12% of all rated companies), and by July 2020, yields remained in the double-digits for 23% of corporate bonds. On July 6, 2020, the Bank of Israel (BoI) announced its intent to initiate secondary market purchases of NIS 15 billion in domestically issued corporate bonds rated A- and above that did not have an equity conversion option. The Corporate Bond Purchase Program (CBPP) began in late July 2020, and holdings leveled off at NIS 3.5 billion by November 2020. Following the CBPP's announcement, two major corporate bond indexes-the Tel Bond 60 index and the General Corporate Bond Index gained 2.6% and 2.5%, respectively.

Date Revised