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Talking up Tel Aviv

Israel is awash with companies - many in the high-tech sector - eager to make equity and debt issues. Not surprisingly, foreign banks are beginning to establish local bases. The snag for the local capital market is that much of the listing is being done abroad, particularly on Nasdaq. Nick Kochan reports on efforts to bring some of it home.

Despite political and diplomatic uncertainties and a volatile economy Israel appears to be selling its investment story to international capital markets. "There is a lot more banking activity in all directions," says Ron Lubash, Lehman Brothers managing director for Israel. "The country has opened up. You see a whole slew of new companies and new issuers." Lehman predicts at least six new debt issues in the coming year. "There is a general acceptance of Israel shifting to the debt market," says Lubash. "Now the door is open. Israel has more exciting growth prospects than some other as, and a pretty good debt-repayment track record. Both country and companies have little default history."

Israel may be a tempting market for the banks, many of which have stayed out because of the threat of an Arab boycott, but some of the story has to be taken on trust. Economists point to near double-digit inflation, comparatively slow growth at 3.5%, and a budget deficit of 3.7%. One economist admits: "Israel is a tough sell at the moment."

For the moment, though, banks are talking up Israel, especially the opportunities surfacing in the equity and debt markets. Many have set up representative offices in the main commercial centre, Tel Aviv.

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