State Purchases $10 million in Israel Bonds
Foreign investment brings better rate of return to state’s portfolio

January 28, 2009

The state of Illinois purchased $10 million in Israel Bonds this month, locking in a better rate of return than similar bonds sold by United States government agencies in the current volatile marketplace.

The Israel Bonds will mature in three years with a 2.43 percent rate of return.  That compares with United States government agency bonds that were yielding a 1.51 percent return during the same time period.

“This is a good way to safely diversify our portfolio, especially during a time when some of our other investment options aren’t generating as much revenue because of the market fluctuations here in the United States,” Giannoulias said.

Israel Bonds are considered very safe investments. According to the Development Corporation for Israel, and have never defaulted.

'We are extremely gratified by this purchase. The State of Illinois has been a steadfast investor in Israel bonds over the years, highlighting not only support for Israel and our shared democratic values, but also the fact that Israel bonds are a worthy investment in this challenging economic climate,” Israel Bonds President & CEO Joshua Matza said. “Israel's economic resilience has been praised by international credit agencies, and we are proud that the state has also expressed confidence through this significant investment.'

State statute allows for the purchase of foreign bonds as long as they are guaranteed by the full faith and credit of the government as to the principal and interest. The purchase of foreign bonds are permitted as long as the foreign government has not defaulted and has met its payment obligations in a timely manner on all similar obligations at least 25 years.

Illinois started buying foreign bonds in 2003 and has invested with Italy, the United Kingdom and Israel.