Jerusalem Issues: The Debt Stack, Ranking, And What Really Sits Behind Each Series
Series 20 extended the debt curve, but it did not create a new protection layer above the older notes. The real break in Jerusalem Issues' stack runs between the senior unsecured bonds and the subordinated loss-absorption instruments.
What This Follow-up Is Isolating
The main article already argued that 2025 was a balance-sheet and funding year for Jerusalem Issues. This follow-up isolates the question that is easiest to miss if you only look at coupon and maturity: where each series actually sits in the stack, and what really stands behind it.
The short answer is blunt. Series 20 did not create a new seniority layer. It joined the same senior unsecured row that already includes Series 15, 16, 18, and 19. The real break in the stack does not run between the new series and the older ones. It runs between all of that senior debt and the subordinated instruments, Series 17 and the private COCO note.
That distinction matters because investors can easily overread the differences between the listed series. Behind the senior bonds sits the same core mechanism again and again: the proceeds are deposited with Bank Jerusalem on identical or better terms, and Bank Jerusalem gives a separate undertaking to perform the payment terms. In other words, the difference between Series 19 and Series 20 is mainly timing, coupon, and where you sit on the curve. It is much less a question of different collateral or a different rung in the hierarchy.
Put simply, out of ILS 2.98 billion of bonds and subordinated notes at the end of 2025, about ILS 2.76 billion sat in senior debt and only about ILS 220.0 million in the subordinated layer. So even if Series 20 drew the attention, the structure remained overwhelmingly a senior unsecured structure.
Where The Ranking Line Actually Sits
The updated draft trust deed for Series 20 leaves very little room for interpretation. It defines the Series 20 bonds as obligations of the company and of Bank Jerusalem that rank equally with the bank's other unsecured obligations, including public deposits, except for obligations that are explicitly subordinated. The same document also says the bonds are in ordinary ranking, equal to the ranking of all deposits placed with Bank Jerusalem.
That leads to the single most important conclusion in this follow-up: Series 20 is not "above" Series 15, 16, 18, or 19. They all sit in the same senior unsecured bucket. If you want to draw the real line in the hierarchy, it sits below them, at Series 17 and the private non-traded COCO instrument, which appear in both the annual report and the rating reports as subordinated notes with a contractual loss-absorption mechanism.
The protection package does not change that picture. The Series 20 trust deed and shelf-offering report explicitly say there is no collateral, no fixed charge, no floating charge, and no negative pledge. The protection comes from two other places: a matching deposit at Bank Jerusalem on identical or better terms, and the bank's undertaking to the trustee to perform the series terms. The documents also state that the bank's undertaking runs pari passu among the bondholders themselves, with no holder taking priority over another.
The rating reports reinforce the same split. S&P Maalot rates the senior series 15, 16, 18, 19, and 20 at ilAA-, while Series 17 and the private subordinated notes sit at ilA-. Midroog presents the same hierarchy from a different angle: long-term deposits and bonds at Aa2.il, versus subordinated loss-absorption instruments at A2.il(hyb). So the rating agencies are not reading the structure as a gap between Series 19 and 20. They are reading it as a gap between senior debt and COCO.
What Really Sits Behind Each Series
The debt pages in the annual report show that the series differ mainly in duration, coupon, and repayment profile. What sits behind them is effectively split into only two deposit types: deposits against senior bonds, and contingent deferred deposits against the subordinated instruments.
| Series | Layer | Outstanding nominal at year-end (ILS m) | Coupon and linkage | Final maturity / call window | What stands behind it |
|---|---|---|---|---|---|
| 15 | Senior unsecured debt | 139.4 | 0.2%, CPI-linked, annual coupon | December 31, 2026 | Deposit at Bank Jerusalem on identical or better terms plus the bank's undertaking to the trustee |
| 16 | Senior unsecured debt | 632.0 | 0.2%, CPI-linked, annual coupon | June 30, 2028 | The same matching-deposit and bank-undertaking structure |
| 18 | Senior unsecured debt | 644.0 | 0.2%, CPI-linked, annual coupon | September 30, 2029 | The same matching-deposit and bank-undertaking structure |
| 19 | Senior unsecured debt | 682.8 | 2.59%, CPI-linked, annual coupon | January 31, 2031 | The same matching-deposit and bank-undertaking structure |
| 20 | Senior unsecured debt | 388.2 | 2.57%, CPI-linked, semiannual coupon | March 31, 2032 | The same matching-deposit and bank-undertaking structure, with no dedicated collateral |
| 17 | Subordinated COCO note | 142.5 | 1.22%, CPI-linked, semiannual coupon | May 31, 2032, with a call window from May 31, 2027 to June 30, 2027 subject to Bank of Israel approval | Contingent deferred deposit at the bank and a clearly lower ranking layer |
| Private COCO | Private contingent subordinated note | 50.0 | 5.13%, CPI-linked, annual coupon | December 5, 2032, with a call window from December 5, 2027 to January 5, 2028 and quarterly options thereafter, subject to Bank of Israel approval | Contingent deferred deposit at the bank and a clearly lower ranking layer |
That table sharpens the core point: there is no dedicated asset pocket for each senior series. The architecture is basically the same across the senior notes. So the higher coupon on Series 19 and 20 does not buy different collateral. It mainly reflects a different point in time and a different point on the curve.
One more point tends to get lost. Deposits against the senior bonds stood at ILS 2.733 billion at the end of 2025, while contingent deferred deposits stood at ILS 218.1 million. So the asset side draws almost the same line as the liability side: a very large senior layer and a much smaller subordinated one.
What Series 20 Changed, And What It Did Not
Series 20 did change the maturity profile of the stack. It was issued on November 30, 2025 in an amount of ILS 388.217 million nominal, at a 2.57% annual coupon, with principal repaid in four equal installments between 2029 and 2032. In that sense it added a new link at the back end of the senior stack, rather than just extending an existing line.
But it did not change the logic of the structure. There is no new collateral, no new priority layer, and no jump above the older senior series. The updated trust deed also preserves broad flexibility for the company to incur additional obligations of any kind, including obligations that rank senior, equal, or junior to the bonds. The only explicit guardrail is narrower: if the company issues a future unsecured bond series, that future unsecured series will not rank ahead of Series 20 in liquidation.
So what did a Series 20 holder actually get? Two clear things: a seat at the longer end of the senior curve, and the coupon set in late 2025. What they did not get was a separate ring-fence around a specific asset, or a better ranking versus Series 15, 16, 18, or 19.
That is why a too-fast yield comparison can mislead. If all the senior series rest on the same bank, the same deposit mechanism, and the same unsecured framework, then the right question is not "which series sits on a better asset pool?" It is "which part of the same bank credit curve am I buying, and at what price?"
The Maturity Ladder: The New Series Sits Further Back, The Near Wall Stays Up Front
The liquidity table in the annual report makes clear that Series 20 extended the tail of the stack, but did not erase the nearer debt wall. Expected payments on financial liabilities total about ILS 615.3 million within one year, ILS 648.6 million from one to two years, and ILS 610.7 million from two to three years. Only after that do the buckets drop to ILS 460.4 million, ILS 275.5 million, and ILS 371.5 million.
What does that mean for Series 20? It mainly expands the 2029-2032 part of the stack. It does not solve the 2026-2028 section. The nearer wall still belongs mostly to the older senior series, especially 15, 16, and 18. By contrast, the subordinated layer, Series 17 and the private COCO note, sits largely beyond that window. So again, the important distinction is senior versus subordinated, not new versus old.
There is one more analytical point here. Because the company places the issuance proceeds with the bank on identical or better terms, the liability schedule of the company does not tell a story about independent operating liquidity. It mainly tells you how the wrapper's liabilities are arranged over time. That makes Series 20 important as a tool that lengthens the back end of the senior stack, not as a tool that changes creditor priority quality.
Conclusion
If you compress the local evidence into a single line, the conclusion is straightforward: Series 20 is a new series, not a new layer. It extended the senior debt curve of Jerusalem Issues, but it did not create a rung above Series 15, 16, 18, or 19.
The real break in the stack runs between two worlds. On one side sits all of the senior unsecured debt, lining up with the bank's other unsecured obligations, including public deposits, and supported by the matching-deposit mechanism plus the bank undertaking. On the other side sit the subordinated loss-absorption instruments, which are explicitly below that line in both the annual report and the rating reports.
So anyone trying to understand what really sits behind each series should read Jerusalem Issues less as a collateral story and more as a question of where on the same Bank Jerusalem credit curve each instrument sits. Inside that framework, choosing among the senior series is mainly a choice of duration, coupon, and timing. The real structural choice in the hierarchy is senior debt versus the subordinated layer built to absorb more.
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