For the first time, New York State has bought State of Israel Bonds directly from the Israeli government. The state recently purchased $5 million in Bonds from the Development Corporation for Israel.
State Comptroller H. Carl McCall said the action was prompted in part by his trip to Israel in April for a celebration of the nation’s 50th anniversary.
“Seeing what was happening with the economy and what they were doing with the money was reassuring,” said McCall.
The purchase makes New York the 18th state to purchase Bonds directly from the Israeli government. Among the largest holders are Florida and California.
New York State previously had bought $28 million of Israel Bonds on the open market. Those bonds were instantly callable, a stipulation that prevented the state from buying bonds directly from the government of Israel.
McCall said legislation shepherded by Assembly Speaker Sheldon Silver reduced that and other restrictions, making the investment possible for the state’s Common Retirement Fund.
Silver said McCall explained to him that New York State was limited in the amount of foreign investments it could make and that legislation would be needed for the state to invest in Israel Bonds.
“Carl was very much in there pushing for the bill,” said Silver. “We were able to get it through both houses of the Legislature in June. The bill raised the cap forever on foreign investments, but within certain limits. We don’t want unlimited foreign investments.
“I think it’s wonderful. It’s a real help to Israel as opposed to a lot of rhetoric.”
McCall said the Development Corp. for Israel was also “very supportive in agreeing to the terms we wanted. They are floating rate bonds that we feel are attractive.”
Asked if the state would buy more Israel Bonds in the future, McCall replied: “Absolutely. Given the fact the bond market is more attractive [than stocks], it is quite possible we will be purchasing more in the future.”
A spokeswoman for McCall said the Israel Bonds are for 10 years and are one of five investments totaling $685.5 million in Israel the state has made. Among the other investments are $592 million in in Agency for International Development bonds earmarked for Israel and $60.5 million in Israel Electric.Burt Resnick, chairman of the board of Israel Bonds, credited McCall with being “able to convince the administrators [of the retirement fund] to invest in the State of Israel.” He said the purchase of the bonds has “cemented even more” the close relationship between New York and Israel. The purchase, he said, was a “great indication of New York’s faith in the State of Israel and in the State of Israel Bond program.”
Resnick noted that Alan Hevesi, New York City’s comptroller, has also bought Israel Bonds for the city. “We have been working throughout the country to sell bonds to retirement funds of state and local governments,” said Resnick. “Some states don’t allow it because Israel Bonds are not callable and that may be the reason some state have not bought any.”