Mekorot, Israel’s state-owned water company, completed the institutional stage of a tradable bond offering late Wednesday and drew demand of about 3 billion shekels, roughly three times the amount it had originally planned to raise. After the oversubscription, the company increased the financing target to about 1.75 billion shekels, subject to rating agency approval.
The deal was carried out through the expansion of Series 11 and is Mekorot’s first debt raise in 2026. The money is intended to fund the company’s investment program in the water sector, including connecting remote and disconnected areas to the national water grid and building infrastructure for future desalination plants expected to come online in the coming years.
Investors were offered inflation-linked bonds with an average maturity of about 11.4 years and staggered principal repayment through 2053. The bonds carry a AAA rating with a stable outlook. Strong demand allowed the institutional stage to close at a price implying a real annual yield of about 2.75% and a spread of roughly 77 basis points over comparable government bonds.
Because Mekorot is fully state-owned, its debt typically receives very high credit ratings and strong institutional interest. Investors generally assume the state would support the company if needed, even though there is no explicit government guarantee on all of its bond series. Mekorot said growing water consumption and population needs require continued heavy infrastructure investment to ensure reliable and high-quality supply. Ahead of the issuance, the Energy Ministry expressed support to the rating agency and emphasized its commitment to preserving the company’s financial strength.
Chairman Moshe Shimoni said the results reflected capital market confidence in Mekorot and its operations. He said the financing would allow the company to continue a critical investment plan to develop the water sector and expand transmission and supply infrastructure across the country, especially during a period of climate challenges and prolonged drought in the region. Discount Capital led the offering, alongside underwriters IBI Underwriting, Leader Underwriting and Barak Capital.