Israel bonds Frequently Asked Questions
Introduction
The Jerusalem Portfolio (TJP) advocates for Israeli-focused investments.
Our Israeli asset class of choice is Equities, since over long periods of time have had significantly stronger investment performance than Fixed Income investments, which are commonly referred to as bonds. For this reason, TJP portfolio managers invest solely in stocks.
While Equities have proven to be a superior-performing asset class relative to Fixed Income investments, we do acknowledge that bonds may be appropriate for certain investors. As such, we have put together the FAQs below about Israel Bonds to assist the public in holding and managing their Israel Bonds.
Who Issues Israel Bonds?
The main issuer of Israel bonds in the United States is the Development Corporation for Israel (DCI), which is the underwriter of debt securities or bonds issued by the State of Israel. The DCI’s role is that of a broker-dealer and it is a member of the Financial Industry Regulatory Authority or FINRA.
Israel bonds are sold throughout the world. In Canada, they are sold through Canada-Israel Securities Ltd. and the Development Company for Israel sells bonds in Europe. In 2011, the DCI or the organization Israel Bonds created a website to sell Israel bonds online.
There are some financial institutions, such as JP Morgan, Citi, Goldman Sachs, Merrill Lynch, International Deutsche Bank, Barclays Capital, BNP Paribas and others that have a mandate to participate in government bond auctions and carry out trade in the secondary market. In addition, Israel Bonds joined the World Government Bond Index in 2020 and comprises approximately 0.3% of the index.
How do I redeem Israel Bonds?
Once a bond reaches maturity, the holder can submit a request to redeem the bond and receive any accumulated interest. For U.S. bond holders, this is done by submitting a notarized request to Computershare, Israel’s fiscal agent based in Rhode Island, declaring intent to redeem. Holders should deliver their formal request along with a filled out W-9 Form to: Computershare, Attn: Israel Bonds, 150 Royall Street, Canton, MA 02021.
How do I sell an Israel Bond?
Selling an Israel bond before it has reached maturity can be tricky. Foreign securities are not easily bought and sold in other countries. The usual way of liquidating an Israel bond is receiving money for its value once it becomes mature by redeeming. Alternatively, a bond can be transferred to another owner through a signed letter of instruction, the original certificate, and an Assignment Separation from Bond form.
I lost my Israel bond certificate, what do I do?
If the original bond certificate of the Israel bond has been destroyed, lost, or stolen, the bondholder needs to:
● Issue a signed letter to Computershare, Israel’s fiscal agent, describing the situation and your plans of either replacing or redeeming the bond
● Affidavit of Loss & Indemnity–this form has special instructions and a fee.
● A W-9 form for tax purposes–this must include the U.S. bondholder’s social security number. If the W-9 form is not included, Israel’s fiscal agent is required by law to hold a backup of 28% of the total interest.
How do I buy Israel Bonds?
The first step to buying Israel bonds is to open a brokerage account. This can be done in a few steps. Once the account is set up, you will be notified by email that your account is active and you can start investing in Israel bonds.
Opening up an account requires a User Profile. This profile contains essential information such as birthdate to confirm you are at or over the minimum age to invest in Israel bonds. You will create a User ID and password. To open a brokerage account with Israel bonds, you will need:
● Identification Information: A Social Security Number of Proof of Birthdate
● Contact Information: Phone Number and Mailing Address
● Finances: Including investing history, assets, and investment goals
● Employment: Including description, employers name, address of the place of employment
Information after opening up an account. After opening an account, you will have access to information and resources that will help you decide how to invest.
● Bonds, Rates and Prospectuses: These include various types of bonds, including those with fixed and floating rates.
● Investing Options: Portfolios, retirement, special occasions.
● Payment Options: A bank account is the only form of payment accepted online. You will be asked to enter the routing number and bank account number.
You can also invest in Israel bonds by mail if you prefer. The website has information on client support by phone. There is also an app for buying Israel bonds.
Is the interest on Israel Bonds taxable?
Yes. Interest on an Israel bond is taxable, which is the reason a W-9 form is filled out when the bonds are redeemed. Israel bonds are taxed in a similar way to a regular U.S. corporate bond, in which both the interest and capital gains are subject to taxation.
Can I transfer Israel Bonds into my brokerage account?
When purchasing Israel bonds, the buyer sets up a brokerage account specifically for Israel Bonds. There may be some financial institutions, primarily Dealer-Brokers, that allow clients to hold Israel bonds in a brokerage account. It is important to contact an individual financial institution and find out its policy on Israel bonds and brokerage accounts.
What is the phone number for Israel Bonds?
The Development Corporation for Israel’s New York headquarters can be contacted toll free at 1-800-229-9650. A directory list of regional sales offices in the U.S. can be seen here.
Is Israel Bonds a charity? Why does my synagogue or church promote them?
Although many people buy Israel bonds for idealistic reasons to contribute to the State of Israel, the acquisition of such bonds should not be considered an expression of charitable intent. Rather, Israel Bonds should be viewed purely as an investment but that also has the ancillary benefit of being a powerful financial resource that has helped build Israel since its founding and continues to provide support for the country’s many projects while providing investors with a significant return.
Conclusion
We hope you have found the above FAQs to be helpful should you already be invested in Israel Bonds or may be considering making investments in those Bonds. In closing, we want to emphasize that The Jerusalem Portfolio has no connection with the promotion of Israel Bonds nor the State of Israel. We present the above questions and answers for informational purposes only as a neutral third party.
