Bank of Israel to end TELBOR, shift to new overnight interest rate in mid-2025

By Thomson Reuters Apr 16, 2024 | 8:38 AM

JERUSALEM (Reuters) – The Bank of Israel will stop publishing its Tel Aviv Inter-Bank Offered Rate, or TELBOR, as of July 2025, saying it would move to its new shekel overnight interest rate (SHIR) in interest rate derivative transactions.

The central bank said in 2022 that SHIR would eventually replace TELBOR, a proxy for interest rate expectations, but no date was given. SHIR will serve as the overnight interest rate, it said on Tuesday.

The decision to switch the TELBOR interest rate is in line with other major economies worldwide, according to which IBOR type interest rates will be replaced by risk-free overnight interest rates, the bank said.

“The cessation date decision for Telbor interest rate, is an important milestone in the transition process from TELBOR to SHIR,” said Golan Benita, the Bank of Israel’s markets department director.

“The shift to the SHIR interest rate is expected to contribute to the advancement and development of the shekel interest rate derivative market.”

In late 2023, the first interest rate swap transaction using the SHIR rate was executed and cleared, carried out between two domestic banks.

The central bank noted that the SHIR will be published on its website ​by 11:00 a.m. each trading day.

(Reporting by Steven Scheer; Editing by Kirsten Donovan)