For The First Time, TASE Launches Bond Indices Of Companies Selected For Corporate Social Responsibility (CSR): Tel Bond-CPI Linked Maala And Tel Bond-Shekel Maala

The TASE family of SRI (Socially Responsible Investing) indices is being expanded to three indices with two additional Tel Bond Maala indices, which will be calculated alongside the “TA-Maala SRI” equity index

In so doing, TASE joins a small and select international club of index providors that calculate SRI Bond Indices

Last Thursday (October 26, 2017) TASE’s board of directors approved the launch of the following two new corporate bond indices:

“Tel Bond-CPI Linked Maala” Index, composed of bond series of issuers rated by the Maala corporate social responsibility rating organization that are included in the Tel Bond-CPI Linked Index;

“Tel Bond-Shekel Maala” Index, composed of bond series of issuers rated by the Maala CSR rating organization that are included in the Tel Bond-Shekel Index.

With the launch of these new indices, TASE will calculate a total of 22 Tel Bond indices, out of which 10 have been launched this year. TASE has launched a total of 12 new indices this year (Bond & Equity indices).
Socially responsible investing (SRI) indices are intended for investors that believe that there is a connection between CSR and the daily conduct and payment ethics of the company – a belief that has been steadily gaining ground in recent years among investors throughout the world, particularly in northern Europe. With the launch of the Tel Bond-Maala indices in Israel, TASE is strengthening the important link between the capital market and the community.

The new bond indices are aimed at the fixed-interest component of investment portfolios and are characterized by low risk, which is derived from the high rating of the bonds included therein, and they will offer added value in the same way as companies with a high CSR score. Moreover, the new indices expand the variety of products that TASE can offer investors and they are expected to attract interest also from international investors, especially in markets where there is a high awareness of the SRI investments sector, such as in Scandinavia where the “conscientious investments” portfolio is substantial. With the launch of these indices, TASE for the first time joins the relatively small and select club of Index Providers that calculates SRI bond indices, such as S&P, MSCI and Barclays.

In February 2005, TASE launched the TA-Maala Index, which comprised shares ranked at that time by the Maala CSR organization. SRI indices were not common in the world then and TASE was among the pioneers to launch SRI equity index. During the 12 years since the launch of the TA-Maala Index, number of additional SRI indices have been introduced and these have joined the traditional investment instruments in providing a solution, for example for institutional investors, especially in northern Europe, for whom the topic of corporate social responsibility in business is an integral part of their investment portfolio.

A look at the yield of the TA-Maala Index over the years shows that the index outperform the traditional market indices, as shown in the table presented in Appendix A. TASE hopes that the expansion to three Maala indices (instead of the current single index) will contribute to exposing investors to the success of the TA-Maala equity Index, thereby also contributing to the scope of investments on TASE.

Currently, 140 bond series issued by companies ranked by Maala are traded on TASE and these have a market value of NIS 120 billion. Some of these companies, such as the “Israel Electric Company”, “Adama” and “Hot”, are companies whose bonds alone are traded on TASE. Since Maala ranks just Israeli companies or companies having a connection to Israel, the indices will only include bond series of companies incorporated in Israel or of companies with strong Israeli orientation, which are traded on TASE.

Presented below are the principal data relating to the Tel Bond SRI indices (CPI-linked and shekel) based on a simulation conducted on September 30, 2017 :

Tel Bond-CPI Linked Maala

• Market value – NIS 71 billion. 
• Number of series – 52. 
• Number of issuers – 22. 
• Weight of largest issuer (Poalim) – 15%.
• Weighted gross internal rate of return – 1.14%, CPI-linked. 
• Weighted duration – 3.9 years.

• Market value – NIS 26 billion. 
• Number of series – 34. 
• Number of issuers – 23.
• Weight of largest issuer (Poalim) – 12.4%.
• Weighted gross internal rate of return – 1.56%
• Weighted duration – 4.05 years.

The launch date of the new indices has been scheduled for November 29, 2017 and the record date for determining the bond series to be included in the index will be the close of trading on October 26, 2017 (the record date for the semi-annual Tel Bond indices).

TA-Maala Index yield versus other main indices

 Composition of the new indices as of September 30, 2017

TEL BOND-CPI LINKED MAALA (data as of September 30, 2017)
No.	Name	Market value NIS in millions	Expected weight	Maala rating	Midroog rating
1	Leumi B177	5,350	3.00%	Aaa	AAA
2	Adama B2	5,344	3.00%	-	AA-
3	Poalim Hanpakot B34	4,364	3.00%	Aaa	AAA
4	Poalim Hanpakot B10	4,078	3.00%	Aa1	AA+
5	Poalim Hanpakot B32	3,949	3.00%	Aaa	AAA
6	Poalim Hanpakot B14	3,479	3.00%	Aa1	AA+
7	Electricity Corp. B27	3,291	3.00%	Aa2	AA
8	Gazit Globe B12	3,251	3.00%	Aa3	AA-
9	Poalim Hanpakot B33	3,204	3.00%	Aaa	AAA
10	Gazit Globe B11	3,181	3.00%	Aa3	AA-
11	Gazit Globe B4	2,725	3.00%	Aa3	AA-
12	Leumi B 14	2,152	3.00%	Aa1	AA+
13	Shikun & Binui B6	1,887	3.00%	A1	A
14	Leumi B 200	1,624	3.00%	Aa2	AA
15	Shikun & Binui B8	1,587	3.00%	A1	A
16	Leumi B 300	1,237	3.00%	Aa2	AA
17	Electricity Corp. B29	1,131	2.85%	Aa2	AA
18	Delek Group B18	1,101	2.78%	A2	-
19	Shufersal B6	1,080	2.73%	-	A+
20	Cellcom B8	982	2.48%	-	A+
21	Union Issuances B9	855	2.16%	Aa3	-
22	Gazit Globe B10	852	2.15%	Aa3	AA-
23	Paz Oil B6	764	1.93%	-	AA-
24	Oil Refineries B1	762	1.92%	-	A-
25	Meitav Dash B3	757	1.91%	A1	-
26	Alony Hetz B8	756	1.91%	Aa3	AA-
27	Delek Group B13	715	1.81%	A2	A
28	Cellcom B6	695	1.75%	-	A+
29	Delek Group B19	665	1.68%	A2	-
30	Gazit Globe B9	564	1.42%	Aa3	AA-
31	Phoenix B2	532	1.34%	Aa3	-
32	Alony Hetz B6	514	1.30%	Aa3	AA-
33	Discount Bank B10	507	1.28%	-	AA
34	Aspen Group B6	499	1.26%	A3	-
35	Delek Group B22	492	1.24%	A2	A
36	Alrov Properties B4	489	1.23%	A2	-
37	Harel Issuances B5	483	1.22%	-	AA-
38	Hot B1	476	1.20%	A1	-
39	Phoenix Capital B2	459	1.16%	Aa3	AA-
40	Phoenix Capital B5	446	1.12%	Aa3	-
41	Partner B3	435	1.10%	-	A+
42	Oil Refineries B7	407	1.03%	-	A-
43	Shufersal B4	384	0.97%	-	A+
44	Alrov Properties B2	347	0.88%	A2	-
45	Union Issuance B19	342	0.86%	A1	-
46	Harel Issuances B9	320	0.81%	-	AA-
47	Harel Issuances B10	320	0.81%	-	AA-
48	Union Issuance B1	318	0.80%	A2	-
49	Harel Issuances B7	304	0.77%	-	AA-
50	Isr. Railways B2	302	0.76%	Aa1	AA+
51	Harel Issuances B6	287	0.72%	-	AA-
52	Union Issuance B6	261	0.66%	Aa3	-
		71,305	100%