Menora Miv Hon: What Investors Are Really Buying In Series Yod
The main article showed that 2025 reopened the capital window, but Series Yod needs a separate read: this is not just another long Tier 2 line. It is an Additional Tier 1 instrument whose real economics sit around the 2035 first call, fair-value accounting symmetry, and material in-group absorption.
What The Main Article Already Established, And What Still Needs To Be Isolated
The main article argued that 2025 reopened Menora Mivtachim Insurance's capital window, but that the market test was less clean than the headline because almost NIS 300 million of Series Yod was absorbed inside the group. This continuation isolates the point that was too important to leave compressed in one paragraph: Series Yod is not just another long bond. It is an Additional Tier 1 instrument with a real decision point in 2035, payment-deferral mechanics, write-off potential on the matching deposit, and accounting that measures both the asset and the liability at fair value through profit and loss.
That distinction matters because a reader who only sees an NIS 800 million issuance at a 5.18% coupon with a 2074 maturity can easily read it as a longer version of the older lines. That would be the wrong read. Economically, 2074 is mostly a distant legal wall. The real test sits on November 30, 2035, when the first call date arrives and the coupon logic starts to move to a floating structure based on the 5-year Israeli government bond yield plus a fixed 1.16418% spread.
What The Holder Is Actually Buying
Series Yod was issued on September 14, 2025 in a total amount of NIS 800 million. Menora Holdings bought NIS 299.925 million of that amount. Principal is due in one payment on November 30, 2074, and the fixed coupon set at issuance is 5.18%, with two payments a year starting on May 31, 2026.
But that is only the legal wrapper. The more useful investor read runs through five points that move this line out of the ordinary Tier 2 family:
| Headline term | What it means economically |
|---|---|
| Final maturity in 2074 | This is the legal outer date, not necessarily the instrument's economic life |
| First call on November 30, 2035 | This is where the real market test begins, because it is the issuer's first decision point |
| Floating coupon after 2035 | If the instrument is not called, the coupon moves to the 5-year Israeli government bond yield plus 1.16418%, and resets again every 5 years |
| Deferral circumstances | Both principal and interest can be deferred if the solvency-trigger conditions are met |
| Additional Tier 1 status | The holder sits in a more junior layer, senior only to the ordinary shareholders and subordinated to the other liabilities of Menora Insurance and the company |
This chart is not a footnote. It changes how the issuance should be read. The deal size was NIS 800 million, but the amount not bought by Menora Holdings was about NIS 500.075 million. So investors are not just buying yield. They are also buying a structure whose initial absorption was only partly a pure outside-market test.
Why 2035 Matters More Than 2074
The line looks almost perpetual, but its economics are built around a much earlier reset point. On November 30, 2035 the company reaches its first early redemption date. If it does not redeem then, the coupon stops being a fixed 5.18% and moves to a new formula: the yield on a non-linked 5-year Israeli government bond plus the spread locked in at issuance, 1.16418%. After that, the floating coupon resets again every 5 years.
That means holders are not really signing up today for 49 years of fixed carry. They are signing up for an initial period until 2035 and then for a mechanism that keeps handing the line back to market conditions. So 2074 matters legally, but 2035 is the date that governs the economics.
That is also why Series Yod should not be read as equivalent to Menora Miv Hon's older lines. In Tier 2, the market mostly buys spread until call or maturity. Here the market is also buying the issuer's future willingness and ability to refinance Tier 1 capital under terms that will be reset against the 5-year Israeli government curve.
Where The Accounting Tells The Real Story
This is where Note 2 matters more than the headline of the issuance itself. Because the deferred deposit placed with Menora Insurance carries write-off potential, even if the probability is described as low, it is not treated as an asset that provides only principal and interest cash flows. It is therefore measured at fair value through profit and loss. To avoid an accounting mismatch, the company chose to measure the matching Tier 1 liability on the same basis.
That is not a technical side note. It is the document's way of saying that the new line no longer lives in the world of amortized cost. It lives in a world where market value and capital-like features run directly through accounting measurement. By year-end 2025 the company recorded a NIS 32.698 million revaluation on both the matching deposit and the liability itself. In the fair-value note, both sides are presented at NIS 844.96 million, and in the fair-value hierarchy both are classified as Level 1.
What this does not mean matters almost as much as what it does. It is not cash left inside the wrapper. It is also not extra spread suddenly created for holders. It is a symmetrical mark that shows how different this instrument is from a regular subordinated bond: the same feature that allows it to count as Tier 1 pushes both the asset and the liability into fair-value accounting.
The Risk Holders Actually Bear
Menora Miv Hon itself has almost no independent operating economics. The issuance proceeds were deposited with Menora Insurance as Tier 1 capital on matching terms, and Menora Insurance undertook to make the payments required for repayment. So the real holder risk is not the execution risk of a small issuing shell. It is the capital quality and solvency strength of Menora Insurance within an Additional Tier 1 structure.
In Note 11 the company also says that it does not face material market risk because the proceeds were deposited in deferred deposits on terms similar to the notes, and for that reason no sensitivity analysis was presented. That matters. The main movement for holders is not a gap between asset and liability inside the wrapper. It is whether Menora Insurance will remain strong enough to carry this structure when it matters, and whether the market will still be open for future Tier 1 refinancing.
In that sense, Series Yod is less a very long bond and more a long-dated confidence test in Menora Insurance's capital layer. That is also why Menora Holdings' purchase inside the issuance is not a minor detail. If a material part of the line was absorbed within the group on day one, then the question of true outside demand at the 2035 decision point and in later windows remains open.
Conclusion
What investors are really buying in Series Yod is not a fixed coupon until 2074. They are buying an Additional Tier 1 instrument whose economic life runs through a 2035 decision point, a 5-year reset mechanism, payment-deferral logic, and accounting that explicitly marks it as more capital-like and less like plain debt.
So the right read is not simply that this was another long and successful issuance. The better read is that the group managed to place a new Tier 1 layer into the market, but part of the absorption remained at home, and the instrument's real economic price will be tested not in 2074 but at the first refinancing gate and in the ability to reach it without material reliance on internal demand.
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