GDP up 3.1%. New R&D center in Rehovot. Breaking bank guarantee monopoly. TASE may overhaul bond indices.

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GDP up 3.1%. New R&D center in Rehovot. Breaking bank guarantee monopoly. TASE may overhaul bond indices.

Re: February 17, 2026 in Israel - and what it all means for investors at home and abroad.

Sophia Tupolev

Feb 17, 2026

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Quick takes:

Macro & Regulations: Israel’s GDP surged by 3.1% in 2025; The Knesset’s Economic Committee is advancing a bill to break the bank monopoly on financial guarantees.
Tech: Applied Materials doubles down on Israel with a new R&D center in Rehovot.
Real Estate: Azorim acquiring commercial strip; Solel Boneh won a ₪600 million contract for a luxury high-rise project in Jerusalem; Yesodot Eitanim advances a 250-unit project in Haifa.
Capital Markets: The TASE is weighing a major overhaul of bond indices; Carasso Motors secured ₪500 million in early commitments for its Series G bond issuance; Prime Energy successfully raised ₪347 million in a new bond series.

Macro & Regulation

Israel’s economy showed resilience in 2025, with the CBS reporting a 3.1% rise in GDP and a 3.8% increase in business sector GDP. While the government deficit stood at NIS 110 billion (4.3% of GDP), this represents a stabilization from the 6.5% recorded in 2024 during the height of the conflict. Private consumption rose 2.6%, while investments in fixed assets spiked 8.1%.

Simultaneously, the Parliament’s Economic Affairs Committee, led by MK David Bitan, is advancing legislation to allow non-bank financial institutions to issue bank guarantees. Currently, banks maintain a near-total monopoly on this multi-billion shekel market, often charging fees as high as 3.6%. The reform aims to lower the cost of living by introducing competition from investment houses and credit companies like BTB.

Our take: The Q4 GDP growth of 4% suggests that the Interdependency Trap is working in the state’s favor for once; the massive influx of military-related consumption and fixed asset investment is masking underlying structural weaknesses. The bank guarantee reform is a critical piece of the puzzle, if the government can successfully strip this monopoly from the banks, it will release liquidity into the tethered economy.

Technology

Applied Materials (NASDAQ:AMAT) has inaugurated a new R&D center at its Rehovot campus, part of a multi-hundred-million-dollar investment strategy. The facility serves as a global knowledge anchor for semiconductor technology, specifically targeting the AI computing boom. The company now employs over 2,200 people in Israel and spends over 450 million NIS annually in local procurement.

Real Estate

Azorim (TASE:AZRM) is acquiring a 4,500 sqm commercial strip in Ramat Ef’al for ₪136.4 million from Gindi. The move signals a strategic shift to deepen its income-generating portfolio.

Solel Boneh (Shikun & Binui group) will execute the ₪600 million ‘Pastoral’ project for ICR (Israel Canada Group) in Kiryat Yovel, featuring four 23-story towers with a view to Ein Karem.

Yesodot Eitanim (TASE:YESD) was selected for a massive ‘Pinui Binui’ project in Ramat Remez, replacing 80 old apartments with 250 new units near the Technion.

Capital Markets

The Tel Aviv Stock Exchange issued a call today to implement a liquidity-based threshold for bond indices. While the corporate bond market sits at a record ₪422 billion, roughly 90% of series in the Tel-Bond universe see a daily turnover of less than ₪2.4 million. The move aims to lower effective purchase costs for index-tracking funds by excluding illiquid debt.

Carasso Motors (TASE:CRSM) successfully tapped the debt market, securing ₪500 million in early commitments for its Series G bonds. The auction saw high demand of ₪673 million, allowing the importer of Renault and Nissan to lock in a maximum annual interest rate of 2.41%.

Prime Energy (TASE:PRIM) successfully raised ₪347 million in Series D bonds. The institutional round saw high demand of ₪430 million, eventually locking in a 6.32% interest rate with a duration of 4.3 years. The capital will accelerate a ₪2 billion pipeline of dual-use solar and storage projects. The stock has surged 70% YTD.