Central Bank faces down grilling over Israeli bonds brochure

Ireland’s role as a global hub for bond markets attracts all sorts of debt issuers that carry a reputational risk.
Take the flurry of Russian entities – from banks to energy groups – that started to set up special purpose vehicles to issue bonds about a decade ago with prospectuses (a type of detailed brochure) approved by the Central Bank and much of the actual debt listed on the Dublin exchange.
When Russia invaded Ukraine in early 2022, some 33 Russian-linked Irish special purpose vehicles (SPVs) held €35.5 billion of assets. Half of these would be hit by EU sanctions.
On Wednesday, Central Bank governor Gabriel Makhlouf faced a grilling from the Oireachtas finance committee on Israel’s sale of bonds on the back of Central Bank-approved European prospectuses to fund its war on Gaza.
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Israel traditionally had its European bond prospectuses rubber-stamped in the UK, but turned to the Central Bank for authorisations after Brexit. The latest information note on its European bond programme, approved by the regulator in September 2023, states that the net proceeds from its programme “are intended to be used for the general financing purposes of” the state of Israel.
However, the agency that sells debt on behalf of Israel, the Development Company for Israel (International) Ltd, is marketing bonds on the home page of its website with a headline banner saying, “Israel is at war and needs us now more than ever.”
“This isn’t shares in Coca-Cola, this is to kill kids, this is the destruction of an entire state, this is incursions into Lebanon and elsewhere,” Sinn Féin finance spokesman Pearse Doherty said at the committee hearing. “This is carpet-bombing, this is ethnic cleansing at a massive scale.”
While Makhlouf responded that he has looked on, like many, with “sentiments of horror and revulsion at the death and destruction that we’ve seen in the Middle East”, the Central Bank is bound by EU regulations to approve prospectuses that meet “the standards of completeness, comprehensibility and consistency”. It’s a fairly low bar.
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Doherty and Independent Senator Alice-Mary Higgins highlighted clauses of the prospectus legislation that may give the Central Bank “wiggle room” to allow it to review its ongoing authorisation.
Makhlouf pledged to “have a good look at this” but he warned committee members: “I don’t promise to satisfy you.”