Resilience Beyond Headlines – Key Takeaways from Israel’s Capital Summit

Setting the Context

I was privileged to attend the inaugural Israeli Capital Summit, a gathering of the country’s leading finance and capital markets professionals. The setting in Eilat was dramatic — both geopolitically and literally. On the first night, the desert sky offered a full lunar eclipse over the Red Sea. At the same time, conversations inside the conference halls centered on the war in Gaza, its economic implications, and the uncertain regional landscape.

The paradox of Israel was on full display. Early in the summit, a UAV launched by Houthi militants in Yemen slipped past Israel’s air defenses and struck near Eilat’s airport — just minutes from where I had been driving. By the closing session, headlines were breaking about Israel’s unprecedented strike on Hamas leadership in Doha. In the span of days, two headline-grabbing events. And yet, in between, business carried on as usual: panels on regulation, capital flows, bonds, and innovation proceeded with energy and focus.

For me, as an American working in Israel, this contrast was striking. Americans are trained to react to headlines; Israelis, by necessity, live beyond them. “That’s life in Israel,” people told me with a shrug. This resilience isn’t denial — it’s discipline: an ability to focus on fundamentals despite the noise. And that was my central takeaway from the summit: don’t let headlines lead; understand the underlying economic reality.

It also reinforced my conviction: bridging Israel and U.S. investors is not only valuable, it’s essential.

With that, here are my core reflections from the conference.

1. War, Risk, and Resilience

Amos Yadlin — former general, IDF military attaché to Washington, and head of Military Intelligence — spoke on the geopolitical reality and its impact on the Israeli economy. Yadlin invoked Israel’s “Begin Doctrine” (the red line against existential threats) while emphasizing the urgent need to end the war in Gaza.

Prof. Leo Leiderman of Bank Hapoalim captured the market’s paradox: “There’s a dissonance between headlines and market intensity. Markets don’t price the present, they price the future.” That’s why Israel’s shekel has strengthened and its sovereign risk premium has decreased since June’s 12-day war with Iran.

Despite geopolitical turmoil, Israel’s fundamentals remain intact. As one institutional CIO put it: “Every panic turns into an opportunity. Money is long term.” Step back, and Israel’s capital markets continue to offer genuine opportunities.

2. Objective Data vs. Headlines – OECD Perspective

Pictured: Boris Cournede, the head of the Israel desk at the OECD

One of the most refreshing moments was connecting personally with Boris Cournede, the head of the Israel desk at the OECD. His team’s June report projects continued fiscal consolidation and renewed economic activity by late 2025 into 2026. While acknowledging mobilization costs, regional security risks, and budget pressures, the data highlighted enduring strengths:

• Demographics: a young, growing population

• Infrastructure: continued investment in roads, schools, transport, and real estate (the joke in Israel is that the national bird is the crane — the machine!)

• Innovation: world-class leadership in AI

• Markets: CDS spreads (Israel’s sovereign risk premium) have moderated since October 7, even if still higher than the U.S. or Europe

Key takeaway: Israel is dominated by headlines, but the data tells a different story. At Kotel, that’s what we aim to share with investors — not noise, but fundamentals.

3. Fixed Income at the Forefront

Pictured: Corporate Bond Market Panel Discussion

The clearest validation of our work at Kotel came from the corporate bond discussions.

• Credit Resilience: As Gil Avrahami of the S&P rating agency highlighted, “No Israeli rated company went insolvent in the past two years — even through war and judicial reform. Credit quality has held up.”

• Issuance & Liquidity: YTD issuance has already exceeded a record NIS 100 billion. Rate-sensitive firms (mainly real estate) are adapting with short-term debt and commercial paper to manage costs. As one underwriter stressed: “Cash flow is the name of the game, and the Israeli market always finds ways to recycle debt.”

• Market Innovation: New structures are emerging, including convertibles and hybrid products, giving issuers flexibility while offering investors yield with upside. Importantly, Israeli bond markets avoid heavy cash-flow covenants (unlike private credit), keeping refinancing flexible and investors liquid. Panelists noted that this is a positive change to the more burdensome historical regulatory requirments.

• Institutional Demand: Pension funds alone deploy ~NIS 50 billion annually, providing a stable backstop. Margins in the Tel-Bond 60 average less than 1% credit spread above Israeli government bonds, signaling clear expectations for rate cuts.

• Comparative Opportunity: At ~72% debt-to-GDP, Israel’s balance sheet looks healthier than the U.S. (~120%) and much of Europe. Despite the war premium, Israel’s corporate bond market is relatively cheap, transparent, and structurally robust.

Together, this paints a picture of a market that is globally unique: exchange-traded, liquid, transparent, and remarkably resilient. For international investors — especially in the U.S. — this is an asset class hiding in plain sight.

And that’s the heart of our thesis at Kotel. While many focus on Israel’s tech equity story, the bond market is a differentiated, overlooked, and investable opportunity.

4. Global Flows and the Israel Discount

A panel with the TASE, NYSE, and Stifel drove home a crucial point: foreign participation in Israeli markets remains abnormally low, at just ~20%. The reasons are structural, not fundamental: limited research coverage, English-language barriers, and the legacy of Israel’s 2010 reclassification from “emerging” to “developed.”

One speaker put it best: “Good investors want Israel — they just don’t have the tools to access it.”

That’s the opportunity. Building awareness in the U.S. isn’t just about raising capital for Kotel — it’s about unlocking an entire asset class. Kotel’s mission is to serve as that bridge, connecting U.S. capital to Israeli fixed income with clarity and conviction.

5. The AI Overhang

AI came up in every panel. Israel is already a world leader, and its applications in capital markets are expanding rapidly. Personally, AI both fascinates and unsettles me. From Kotel’s perspective, our focus is deliberately agnostic: designed to remain relevant regardless of how fast AI adoption accelerates. As interesting as the debate is, we stay focused on what we can control.

Closing: What This Means for Investors

The Capital Summit reinforced what headlines obscure: Israel’s economy and markets are under strain, but also adaptive, liquid, and resilient. Unlike extreme narratives, Israel is neither existentially doomed nor untouchable. Its truth, like any other country’s, lies in the nuanced middle.

The markets are sound and stable. In particular, the bond market continues to function as a stable foundation, pricing risk realistically while creating opportunities for issuers and investors alike.

For global allocators, the message is clear: don’t mistake geopolitical noise for market fundamentals. Israel’s markets are more robust than they appear from afar. At Kotel, our goal is to make those opportunities accessible, transparent, and investable for U.S. investors.

Pictured: Full Lunar Eclipse Over the Red Sea

About Kotel Investment Management: We serve as a bridge between U.S. capital and Israel’s overlooked fixed income markets, sharing insights and perspective through our research and thought leadership.

This content is for informational and educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities.