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MIDDLE EAST CRISIS UPDATE: 6 MARCH 2024

US’s Blinken urges Hamas to sign ceasefire; Israel taps global bond market

US’s Blinken urges Hamas to sign ceasefire; Israel taps global bond market
US Secretary of State Antony Blinken. (Photo: EPA-EFE / Antonio Lacerda)

US Secretary of State Antony Blinken urged Hamas leaders to agree to a ceasefire deal that would free hostages and halt the war in Gaza, even as he called on Israel to let in more humanitarian aid for increasingly desperate Palestinians.

Israel is set to sell its first international bond in the public market since the war with Hamas erupted in October.

US Central Command said that it combined with the Royal Jordanian Armed Forces for a second airdrop on Tuesday, releasing more than 36,800 “meal equivalents in Northern Gaza, an area of great need”.

Blinken urges Hamas to sign ceasefire, Israel to ‘maximise’ aid

Secretary of State Antony Blinken urged Hamas leaders to agree to a ceasefire deal that would free hostages and halt the war in Gaza, even as he called on Israel to let in more humanitarian aid for increasingly desperate Palestinians. 

“It is on Hamas to make decisions about whether it’s prepared to engage in that ceasefire,” Blinken said on Tuesday at the State Department in Washington. “It’s also urgent, irrespective of a ceasefire, to dramatically increase the humanitarian assistance getting to people inside of Gaza.”

Blinken spoke alongside the Qatari prime minister, Sheikh Mohammed bin Abdulrahman Al Thani, who was in Washington for meetings as part of a broader US-Qatar strategic dialogue. Qatar has played a key role as a mediator in efforts to win agreements from Israel and Hamas on hostage releases and a ceasefire.

A top member of Israel’s war cabinet, Benny Gantz, is also in Washington for meetings with senior US officials, including scheduled sessions on Tuesday with Blinken and Defense Secretary Lloyd Austin. It was unclear whether Gantz and Sheikh Mohammed had plans to meet with one another or jointly with Biden administration officials.

Blinken called the humanitarian situation in Gaza “unacceptable and unsustainable,” just days after scores of Palestinians were killed and injured on Thursday during an outbreak of violence in which Israeli troops opened fire near a besieged convoy of aid trucks.

President Joe Biden, who has said the “aid flowing to Gaza is nowhere nearly enough”, said the outbreak of violence near the convoy could set back the ceasefire talks between Israel and Hamas, which is designated a terrorist group by the US and European Union.

The US and Jordan have resorted to using airdrops of assistance, which experts view as an inefficient and ineffective way to distribute aid compared with land crossings. US Central Command said that it combined with the Royal Jordanian Armed Forces for a second airdrop on Tuesday, releasing more than 36,800 “meal equivalents in Northern Gaza, an area of great need”.

“Israel has to maximise every possible means, every possible method of getting assistance to people who need it,” Blinken said. “It requires more crossings, it requires more aid getting in. And once that aid is in, it requires making sure it can get to the people who need it.”

Israel selling first public dollar bonds since start of war with Hamas

Israel is set to sell its first international bond in the public market since the war with Hamas erupted in October.

The government is offering a dollar bond with tranches of five, 10 and 30 years, according to people familiar with the matter. The transaction had attracted around $25-billion of bids, they said.

Israel has issued several privately placed bonds in currencies such as the dollar, euro and yen since the conflict began. But it hasn’t entered the public market.

The deal size will probably be around $4-billion to $6-billion, according to Morgan Stanley, which would make it one of Israel’s biggest bonds yet.

It is offering the shortest notes with spread guidance of around 160 basis points over US Treasuries, according to the people, which would equate to a yield of roughly 5.8%. The guidance is around 175 basis points for the 10-year tranche and 205 basis points for the 30-year debt.

The war has roiled the Israeli economy, though much of the shock from the initial few weeks has worn off. The shekel has rallied hard in the past three months and is far stronger than when the conflict started on 7 October.

The government’s average dollar yields have fallen to around 5.7% from a peak of 6.5%, suggesting investors are more confident about the economy’s resilience. Nonetheless, Israel’s credit-default swaps — or the cost of protecting against a default — remain elevated.

Israel will have to sell a near-record amount of bonds this year to fund its fight against Hamas, Bloomberg has reported. Most of that issuance will take place in the shekel market, but foreign borrowing is still expected to exceed $10-billion.

The government has “significant funding needs” that may be around $12-billion this year in international markets, Pascal Bode, a London-based strategist with Morgan Stanley, said in a note to clients on Tuesday.

Moody’s Investors Service cut the government’s rating by one level to A2 in February, marking the country’s first downgrade. Yet that still leaves it well within investment-grade territory and on a par with Iceland and Chile. Moreover, it’s rated two levels higher, at AA-, by S&P Ratings. DM

Read more in Daily Maverick: Israel-Palestine War

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