Jerusalem Issues: How Much Of The Debt Is Really Outside, And How Much Is Already Back At Bank Jerusalem
The screen shows about NIS 2.63 billion par value of tradable debt, but at least NIS 210.4 million par value is already back at Bank Jerusalem through Series 18. That gap changes how market depth and outside demand should be read.
What This Follow-Up Is Actually Isolating
The main article already established that Jerusalem Issues remains a funding conduit for Bank Jerusalem, and that Series 20 enlarged the balance sheet without materially improving the economics. This continuation isolates a different question: when looking at the company's tradable debt stack, how much is truly sitting with outside holders, and how much has already come back inside to Bank Jerusalem.
That is not a technical footnote. In market data, every series still looks fully tradable, with about NIS 2.629 billion par value outstanding across the listed stack. But once the financial statements add holder identity, the picture changes. The moment Bank Jerusalem holds part of the bonds issued by its own subsidiary, the screen's tradable quantity stops being the same thing as debt that genuinely remains outside the group.
The practical implication is twofold. First, market depth looks deeper than it really is, especially in Series 18. Second, even a new issue that increases the outside stack does not automatically mean the market has become broader. It may simply add fresh outside volume next to older volume that has already come back to the bank.
On The Screen Everything Is Tradable. Outside The Group, Less Of It Is
On a pure exchange view, Jerusalem Issues has six tradable series with an aggregate par amount of NIS 2,628.8 million. Series 16 stands at NIS 632.0 million par, Series 18 at NIS 643.9 million, Series 19 at NIS 682.8 million, and Series 20 at NIS 388.2 million, with smaller balances in Series 15 and Series 17. That is the number the screen sees, and therefore the number that is too easy to read as debt that is still outside.
That is exactly where the reading needs to slow down. In market data, tradable quantity is a technical category: whether the security is listed and how much is registered. It does not answer the harder question of who actually holds it at year-end. In Jerusalem Issues that distinction matters, because the parent bank itself buys some of the bonds back.
Even without assuming any additional holding beyond what is explicitly disclosed in par terms, NIS 210.4 million par already needs to be removed from debt that is truly outside. That takes the upper bound of genuinely external tradable debt down to roughly NIS 2.418 billion par, about 8% below what the screen suggests.
The Two Numbers Are Not Contradictory. They Are Measuring In Two Different Languages
This is where readers can get tripped up, because the company gives two different numbers for the same issue, and each is correct from a different angle.
| Measurement layer | Amount | Unit | What it means |
|---|---|---|---|
| Total tradable listed series | NIS 2,628.8 million | Par value | The amount registered for trading at period-end |
| Bonds held by the bank | NIS 242.8 million | Balance-sheet amount | The carrying value of company bonds held by Bank Jerusalem |
| Bank Jerusalem holding in Series 18 | NIS 210.4 million | Par value | The nominal amount the bank actually holds in Series 18 |
| Bank share of Series 18 | 32.68% | Percent of the series | The slice of Series 18 that no longer sits with outside holders |
What matters is that the gap between NIS 242.8 million and NIS 210.4 million is not a disclosure inconsistency. It is a units issue. In the related-party note, the bank-held bonds are shown at a balance-sheet carrying amount. In the events note, the company gives the nominal par amount of Series 18 held by the bank at year-end. Anyone who reads those two numbers as if they were the same unit will overcomplicate a point that is actually quite clean.
That becomes an analytical point in its own right. The NIS 242.8 million number should not be read as some additional hidden series that came back to the bank. It is the accounting carrying value of the holding. The number that tells the reader how much nominal debt is explicitly back inside the group is NIS 210.4 million, and it is tied specifically to Series 18.
Series 18 Is Where Market Depth Looks Too Wide
This is where most of the distortion sits. Series 18 is listed with NIS 643.9 million par outstanding, but by year-end the bank held NIS 210.4 million par of that series after a partial redemption on September 30, 2025 reduced its position by NIS 52.6 million par. In other words, only NIS 433.5 million par of Series 18 was actually left outside the bank, or 67.32% of the series.
That is exactly why Series 18 should not be read through listed quantity alone. On paper, the full NIS 643.9 million par still appears tradable. In practice, almost a third of the series is already back with the parent. Any reading of depth, secondary activity, or holder dispersion therefore has to begin with the effective outside amount rather than the registered amount.
There is another layer here. The company notes that the bank's purchases were executed off-exchange, and that under the trust deeds the bonds purchased by the bank do not grant it rights, including voting rights or the right to receive interest. That matters a great deal for effective float. The slice that has come back to the bank is not simply another large holder inside the same series. It is a different type of internalized position, which makes it a much weaker signal of genuine outside demand.
That is also how the related-party line should be read. When the bank holds bonds issued by its own subsidiary, that does not mean the market supplied fresh external demand in that amount. It means part of the volume that had already been issued has moved back inside the group, which leaves real economic depth narrower than the screen's technical depth.
Series 20 Increased Outside Debt, But It Did Not Really Broaden The Holder Base
The November Series 20 issue did change one thing. The company raised NIS 388.217 million par, adding fresh volume to the tradable debt stack that sits outside the bank. In that sense, the new series more than offset, in raw size, the NIS 210.4 million par that the bank holds in Series 18. Anyone looking at the company as a whole rather than only at Series 18 can fairly say that the outside stack still grew.
But even here the question is what exactly grew. Outside debt depth increased mainly through an institutional book, not through a broad investor base. In the November 30 auction, the company received 50 orders for 388,217 units, of which 387,958 units came from qualified investors and only 259 units from the public. That means 99.93% of the allocation went to qualified investors and just 0.07% to the public. The coupon was also set at 2.57%, exactly at the maximum rate offered.
That does not mean the issue was weak. It was fully placed and it did add real external debt. But it is not an issue that tells a story of broad public depth or unusual pricing power. Even after Series 20, the right question is not only how much new outside debt was added, but how much of that debt is actually dispersed across a broad outside holder base and how much sits in a narrower institutional book.
That is the core point of this continuation. Series 20 does not erase the internalization problem created by the bank-held portion of Series 18. It simply enlarges the outside side of the equation again. So the right 2025 reading is neither that everything is outside nor that everything came back to the bank. It is a mixed picture: part of the debt has already come back inside, and the new debt that went outside mainly strengthened the institutional layer.
Conclusion
The main article was right to warn against treating the full debt stack as pure outside exposure. This follow-up lets that point be measured more precisely. The screen shows NIS 2.629 billion par of tradable debt, but explicit disclosure already shows that at least NIS 210.4 million par, nearly a third of Series 18 and about 8% of the listed tradable stack, is already held by Bank Jerusalem. At the same time, the related-party note shows a carrying amount of NIS 242.8 million for company bonds held by the bank. Anyone who does not separate par value from balance-sheet value will miss the point.
What does that mean in practice? Debt that genuinely remains outside the group is narrower than the screen's tradable quantity, and Series 18 is where that gap is largest. Series 20 did add NIS 388.2 million par of fresh outside debt, but it did so through an allocation that was almost entirely institutional and at the offered coupon ceiling. So even after the new issue, the market should not look only at stack size. It should look at the quality of depth: how much actually remains outside the group, how concentrated those holdings are, and how much of what still appears tradable is volume that has in fact already come back to the bank itself.
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