McRae: Israel Bonds: A Safe Investment for a Safer World
By Treasurer David McRae
This year the state of Israel celebrates its 75-year anniversary, and Mississippians are playing a small role in supporting our friends there.
While Middle East Christian communities are being destroyed by daily threats of terror attacks, imprisonment, and even execution, Israel’s 200,000 Christians are the exception, living in relative peace in the only thriving democracy in the Middle East. That makes it more important than ever to protect The Holy Land, the shared birthplace of the Jewish and Christian faiths. One small way we are helping is by investing in Israel bonds.
Not too long ago the Mississippi Legislature approved additional options for investing taxpayer resources. Prior to 2019, the state treasury was primarily authorized to invest funds into state banks and the U.S. Treasury, but with this change, another promising investment option became available – placing the state’s excess general funds into investment bonds issued by Israel. Not only is this a safe investment, but it provides a higher rate of return compared to many other options.
Mississippi has been invested in Israel bonds since 2019 and has earned over $1.7 million in interest income on our initial $20 million investment. Israel has a high-quality credit rating, and the bonds have a solid coupon, paying 4.57% on our reinvestment that occurred on February 1, 2023. That’s about 37 basis points higher than the current two-year U.S. Treasury rate of around 4.2% (as of Feb. 3, 2023).
For more than 70 years Israel bonds have served as a strategic resource for our most important ally in the Middle East. Proceeds from the bonds have helped build every sector of Israel’s economy, paving the way for the nation to become a leader in the high-tech, green-tech, and bio-tech sectors globally. Worldwide sales have exceeded $48 billion since the first bonds were issued in 1951, and U.S. sales exceeded $1 billion in 2022.
In the decades since David Ben-Gurion, Israel’s first prime minister, initially conceived the idea, the bonds have become a reliable investment for institutional as well as private investors seeking to diversify portfolios and preserve capital. Over 90 U.S. state and municipal pension and treasury funds are invested in Israel bonds. Other investors include corporations, insurance companies, associations, unions, banks, financial institutions, universities, foundations, and synagogues. For individual investors, donations of Israel bonds can provide a way to support one’s favorite causes while simultaneously supporting Israel.
Not only is Israel a sovereign nation, a critical ally, and a beacon of democracy in the Middle East, Israel is also a very important contributor to Mississippi’s economy. In addition to several other investments in our state from other Israeli companies, Stark Aerospace in Columbus is a subsidiary of Israel Aerospace Industries (AIA), Israel’s major aerospace and aviation manufacturer. The proud Mississippians employed there produce key components for Israel’s Arrow 3 Missile, contributing directly to Israel’s defense. Stark also provides key support to the American defense industry, making the most of Israeli and American innovation to protect both of our great nations.
By choosing to stand with Israel, we support the continued growth of democracy; we support the freedom of religion, speech, and assembly; we support the promise of liberty that America has come to represent. Now more than ever before, our friendship with Israel must be unwavering.