Clal Capital Raising: What series 15 really is, and where write-down risk actually begins
The main article showed that the market remains open to Clal Capital Raising. This follow-up isolates series 15 and shows that it is not just another long-dated bond, but an Additional Tier 1 instrument where coupon cancellation, principal deferral, and principal write-down are different stages, and where the real economic date sits in 2036, well before 2075.
What The Main Article Established, And What Still Needed To Be Isolated
The main article argued that Clal Capital Raising should not be read through earnings, but through the market’s willingness to keep funding Clal Insurance. That is correct, but series 15 deserves a separate zoom lens because investors did not buy just another long-dated bond here. They bought an Additional Tier 1 COCO instrument with deep subordination, coupon-cancellation mechanics, principal-deferral mechanics, and a write-down framework that does not begin with every ordinary wobble.
That is the main point: 2075 is the legal end date, but 2036 is the real pricing test. Until then the series carries a fixed 5.12% annual coupon. If it is not redeemed by October 31, 2036, the coupon stops being fixed and resets to the market yield on five-year Israeli government bonds plus a fixed spread of 1.15607%. Anyone reading the series only through its final legal maturity is missing the economic heart of the instrument.
There is also a second common mistake. In fast market shorthand, coupon cancellation, principal deferral, and principal write-down are often treated as if they were the same event. They are not. The documents create three separate stages. First the coupon can disappear. Then principal can be deferred. Only after that do the write-down triggers come into play. That distinction matters because it changes both how the risk should be read and how the instrument should be priced.
| Focus | What the documents actually say | Why it matters |
|---|---|---|
| Instrument type | COCO notes recognized as Additional Tier 1 capital | This is not ordinary debt, but a capital layer designed to absorb stress before more senior layers |
| Ranking | The series ranks pari passu with other Additional Tier 1 instruments, is subordinated to all other liabilities of Clal Insurance and the issuer, and is senior only to ordinary shareholders | Investors sit very low in the capital structure |
| Economic test date | First call date and first coupon-reset date are both October 31, 2036 | That date matters much more for day-to-day economics than the legal 2075 maturity |
| Latest market test | In January 2026 the company issued ILS 590.607 million par with gross proceeds of about ILS 622.5 million, across 57 orders, without underwriting, and with 88% early commitments | Demand existed, but it was anchored and structured rather than euphoric |
The chart makes one point. The market did not meet a marginal instrument. By year-end 2025 the series already stood at ILS 1.149581 billion par, and after the January 2026 expansion it had reached ILS 1.740188 billion par. That is large enough to justify a far more exact reading of the mechanics, not just of the headline maturity.
What Series 15 Really Is
The most important word in the prospectus is not 2075, but COCO. That label places the series in the world of loss-absorbing capital instruments, not in the world of senior debt. Even though Clal Insurance undertook to bear payment of principal and interest, that same documentation explicitly preserves coupon cancellation, principal deferral, and the possibility of full or partial principal write-down. In other words, there is a payment undertaking inside the terms of an equity-like capital instrument, not a promise that neutralizes its capital character.
That is also why the rating sits below the company’s Tier 2 instruments. Midroog assigned an A1.il(hyb) rating to this instrument, while series 11 through 14 are rated Aa3.il(hyb). That gap is not marketing language. It is the rating framework’s way of saying that series 15 is designed to absorb more before other layers do.
Another easy point to miss is that in January 2026 the supervisor approved Clal Insurance to include an Additional Tier 1 instrument in equity calculations in an amount of about ILS 700 million, subject to regulatory limits. From the issuer’s perspective, the expansion was therefore not just a funding move. It was an explicitly capital-structuring move. That helps explain why the instrument was drafted in a harsher form from the start.
Where The Pain Starts Before Write-Down
The first stage is not principal write-down, but coupon cancellation. If Clal Insurance has no distributable profits, the coupon can be cancelled. That matters because this is the point at which investors discover that the instrument may trade like debt, but behaves like capital once stress starts to build.
The second stage is principal deferral. The threshold is higher here. Principal can be deferred if Clal Insurance’s equity is below SCR, if Clal Insurance’s board determines there is a concrete near-term concern about its ability to meet SCR or repay more senior liabilities, or if the supervisor orders non-payment of coupon or deferral of principal because of a material impairment in the solvency ratio or a concrete near-term concern about meeting SCR.
The detail that makes this stage genuinely harsh comes immediately afterward: principal that is not repaid on time because of deferral circumstances does not accrue default interest, and coupon payments are cancelled. Principal is then payable only once the deferral circumstances have ceased, subject to a board decision and prior supervisory approval. This is not just a few months of timing drift. It is a move into a state where the ordinary repayment schedule has stopped governing the instrument.
| Stage | What gets hit | What triggers it | What the holder does not get |
|---|---|---|---|
| Coupon cancellation | The coupon | No distributable profits | No compensation, because the coupon can be cancelled outright |
| Principal deferral | Principal, and in some cases coupon | Equity below SCR, board determination of a concrete near-term concern, or supervisory order | No default interest on deferred principal |
| Exit from deferral circumstances | Possible return to payment | Only after the circumstances cease, plus board decision and supervisory approval | No automatic return to the original schedule |
This is the heart of the issue, because it separates cash-flow risk from actual capital-loss risk. Investors can be hurt well before there is any formal principal write-down.
Where Write-Down Risk Actually Begins
This is where precision matters. Write-down is not triggered by every ordinary regulatory strain. The documents list three concrete situations.
The first: based on the financial statements preceding the latest published set, Clal Insurance’s equity is below SCR and no capital completion has been carried out by the time the latest statements are published.
The second: based on the latest published financial statements, Clal Insurance’s solvency ratio is below 75%, and again no capital completion has been carried out by the time of publication.
The third: the auditor draws attention in the latest financial statements or review report to material doubts regarding Clal Insurance’s ability to continue as a going concern.
This is the single most important difference between fast market shorthand and an actual legal reading of the instrument. Not every profit hit, not every temporary decline in distributable profits, and not even every early capital-pressure signal triggers write-down. Write-down begins only once the system is already in one of those three extreme zones, or once capital has not been restored in time.
That reading also fits the rating action. Midroog wrote that uncertainty around reaching deferral circumstances or a trigger event is low, as long as a sufficient margin above the effective solvency requirement is maintained. That does not remove the tail risk. It simply means the rating still sees distance between the current state and the write-down zone.
Why 2036 Matters More Than 2075
Legally, principal is due on October 31, 2075. Economically, that is not the first date that matters. The first call date is October 31, 2036, and after that the company may redeem the instrument only once every five years on an interest-payment date, subject to supervisory approval. On that same date, if no early redemption has taken place, the coupon also stops being fixed.
Until 2036 the annual fixed coupon is 5.12%. If the series remains outstanding beyond that point, it moves every five years to a new formula: the market yield on five-year Israeli government bonds at that time, plus a fixed spread of 1.15607%. So 2036 is not just a call window. It is also the reset point. Beyond it, investors are no longer sitting on the same paper economically, even if the legal instrument remains the same.
The chart serves one purpose. It reminds the reader that the 39 years between 2036 and 2075 are not just a remote tail. They are the period in which anyone who does not get taken out at the call date is holding an instrument with a changed coupon regime and with continued dependence on supervisory approval for future redemption. That is why the real near-term economic question is not whether the issuer survives until 2075, but whether 2036 remains a credible call date in the market’s mind.
What The January 2026 Market Test Actually Said
The January 2026 expansion gave a useful answer, but not a one-directional one. On the one hand, the deal worked: ILS 590.607 million par, gross proceeds of about ILS 622.5 million, 57 orders, no underwriting, and 88% of the units already backed by early commitments from classified investors. That shows the market was willing to add exposure to the instrument even after the initial October 2025 launch.
On the other hand, the clearing price was the minimum unit price of ILS 1,054. That is not a sign of weakness, but neither is it a sign of euphoria. The right read is that the market was willing to absorb the series, largely on the basis of a strong institutional anchor, without forcing underwriting and without rejecting the issue, but also without running materially above the floor price.
That nuance matters because it puts series 15 back in the right frame. The market bought the instrument, but it did not forget what it was buying. If investors had been treating it like plain senior long-dated debt, one would expect a very different order-book and pricing dynamic.
Bottom Line
Series 15 is not simply a 2075 bond. That is too convenient a way to read an instrument that is in fact Additional Tier 1 capital with three distinct risk rings: coupon cancellation, principal deferral, and only then principal write-down. The write-down itself begins only in three concrete situations, not every time the environment becomes less comfortable. But anyone who waits only for the write-down trigger misses the fact that holders can start feeling pain much earlier, first in the coupon layer and then in the deferral layer.
That is why 2036 matters more than 2075, and why the rating matters more than the headline maturity. As long as the market believes Clal Insurance will keep a sufficient cushion above capital requirements, and that the first call date remains a plausible route rather than a convenient fiction, the series can trade like a deep capital instrument that still functions. If either of those anchors starts to crack, the market reading of the series will change well before anyone reaches an actual write-down event.
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