Israel Bonds is the commonly known name of Development Corporation for Israel (DCI), the U.S.underwriter of debt securities (Israel bonds) issued by the government of Israel. DCI is headquartered in New York City, and is a broker-dealer and member of the Financial Industry Regulatory Authority (FINRA).
The sale of Israel bonds is global in scope. In addition to the United States, bonds are sold in Canada through Canada-Israel Securities, Ltd., and Europe through Development Company for Israel (UK) Ltd. Sales have increased steadily since the initial Independence Issue was offered in 1951, with total worldwide sales approaching $40 billion. In 2013, U.S. Israel bond sales surpassed $1.12 billion, the first time domestic sales exceeded the $1 billion mark. Sales again exceeded $1 billion in 2014 and 2015.
In the fall of 2011, Israel Bonds launched an eCommerce site to facilitate investing in Israel bonds online. Investments made via the online site have exceeded $125 million, a number encompassing over 50,000 bondholders.
1950 to 1951
The idea to float bonds issued by Israel's government was conceived by Israel's first prime minister, David Ben-Gurion, in the aftermath of Israel's War of Independence. The war had taken a terrible toll in casualties (more than 1% of the country's population was killed), and the nation's fledgling economy was devastated.
Compounding the dire situation was the fact that Israel faced economic demands unique to the new state, most especially the arrival of hundreds of thousands of immigrants from post WWII Europe and the Middle East.
Short on economic resources, Israel suffered food shortages and imposed rationing, and new arrivals had to be housed in primitive shelters.
With his country financially overwhelmed, Ben-Gurion turned to the Diaspora community for help. In September 1950, he convened a meeting of American Jewish leaders at Jerusalem's King David Hotel, where he proposed issuing bonds to help provide Israel with a more secure economic foundation. Ben-Gurion's goals were two-fold: to obtain millions of dollars in funding for immigrant absorption and the construction of national infrastructure, and to engage Diaspora Jewry as active partners in building the new Jewish state.
The American Jewish leaders supported Ben-Gurion's plan and, the following spring, the prime minister traveled to New York City to help launch the inaugural Independence Issue at a Madison Square Garden ceremony. Expectations for first-year sales were $25 million. Instead, final results for 1951 more than doubled projections, exceeding $52 million.
1952 to 1966
The new organization increasingly expanded operations throughout the US and Canada, providing proceeds utilized to help fund projects in Israel's industrial and agricultural sectors, including the Dead Sea Works and National Water Carrier.
Within six years, according to an article in the January 21, 1957, issue of Time magazine, "bond sales alone amount(ed) to an astonishing 35% of Israel's special development budget." The article quoted Foreign Minister Golda Meir, who emphatically stated, "the central role in building our economic strength has been played by Israel bonds."
1967 to 1992
Over subsequent decades, sales continued to increase, particularly in times of crisis. During 1967's Six-Day War, sales exceeded $250 million, a total that more than doubled during the Yom Kippur War of 1973. From the mid-1980s to 1992, the bonds were the primary way the Israeli government obtained external funding. In 1991, the year of the Persian Gulf War and Iraqi missile strikes on Israel, annual worldwide sales broke the $1 billion threshold.
1993 to Present
Annual worldwide sales remained at $1 billion or above as Israel bonds became increasingly viewed not only as a means of supporting Israel, but as a useful financial investment as well, particularly for pension funds.
In 2004, the Bank of Israel issued a report “to describe the activity of the Israel Bonds organization over the past fifty years and to summarize changes that have taken place in the products the organization offers with respect to quantities, types of bonds and recruitment costs.” In doing so, the report noted, “an analysis of the sale of bonds indicates an increase in sales from one decade to the next.” It also observed that the Bonds organization has been market-responsive over the years, “so that each bond addressed a different target audience: individuals, communities (and) financial bodies.” The report concluded that Israel Bonds is “a uniquely Israeli establishment, and no other countries have a similar organization.” It stated that “(when) Israel has found it difficult to raise high sums of external debt, Israel Bonds has shown itself to be capable of reacting quickly to increased needs for foreign currency.”
In fall 2011, the organization launched its e-commerce site. The site has resulted in over $90 million in sales to date, encompassing more than 37,000 bondholders.
In 2013, U.S. sales exceeded $1.1 billion, the first time domestic sales crossed the $1 billion threshold. The achievement was realized for a second straight year in 2014 and again in 2015.
In June 2016, the Bonds organization launched a new initiative to counter anti-Israel activism on campus. Entitled "The Alternative BDS - Bonds Donated to Schools," the program encourages donations of Israel bonds to universities.
Initially, Israel Bonds offered one security. As the program became increasingly successful, multiple investment options were made available. The following bonds are currently offered:
- Jubilee Issue Bonds – fixed rate 2, 3, 5 and 10-year bonds; $25,000 minimum investment and increments of $5,000. Interest is paid semi-annually on May 1 and November 1.
- Maccabee Issue Bonds – fixed rate 2, 3 and 5-year bonds; $5,000 minimum investment and increments of $500 . Interest is paid semi-annually on May 1 and November 1.
- Sabra Savings Bonds – fixed rate 3-year bonds; $1,000 minimum investment and increments of $100. Interest paid upon maturity.
- Mazel Tov Bonds – fixed rate 5-year bonds; $100 minimum investment and increments of $10, limited to $2500 per day for each purchaser and holder. Interest paid upon maturity.
- eMitzvah Bonds – fixed rate 5-year bonds; $36 minimum investment and increments of $18. Maximum allowable amount purchased by one person in a transaction, registered in the name of one holder, is $90. Interest paid upon maturity. May only be purchased online.
- Floating Rate LIBOR Bonds – variable rate 2, 3 and 5-year bonds; $5,000 minimum investment and increments of $500; interest paid semi-annually on June 1 and December 1.
Rates change two times per month on most Israel bonds. Interest for fixed rate bonds is based on prevailing Treasury bond rates, plus a spread. Rates for floating rate bonds are equal to the 6-month LIBOR rate in effect on the initial determination date, plus or minus a spread that remains fixed until maturity.
The prospectus states, "Israel has never defaulted in the payment of principal or interest on any of its internal or external indebtedness."
Initially, investors in Israel bonds were largely members of the Jewish community who wanted to help Israel. However, as offerings began featuring multiple rate and maturity options, the investor base became increasingly diversified. Private and institutional investors alike viewed Israel bonds as a significant means of strengthening portfolios in addition to supporting Israel. More than 80 U.S. state and municipal pension and treasury funds have invested over $2 billion in Israel bonds to date.
According to the prospectus, Israel uses the net proceeds from the sale of the bonds for general purposes of the state. 
- "IsraelUKbonds – About Us". Development Company for Israel (UK) Ltd. Retrieved May 23, 2014.
- "Organizations: Dollars for Israel". Time. January 21, 1957.
- "Annual Report on Form 18-K to the U.S. Securities and Exchange Commission". State of Israel. July 1, 2002. Retrieved May 23, 2014.
- Rehavi, Yehiel; Weingarten, Asher (September 6, 2004). "Fifty Years of External Finance via State of Israel Non-Negotiable Bonds". Bank of Israel. Archived from the original on February 2, 2007. Retrieved May 23, 2014.
- "Israel Bonds: Current Rates". Development Corporation for Israel. Retrieved May 23, 2014.
- State Israel Bonds prospectus