With the backdrop of rising protests, the county’s Investment Policy Committee rejected a proposal that would have allowed the repurchase of millions of dollars worth of Israeli bonds.
Instead, the investment panel on Thursday, Oct. 15, refused to raise the limit on Israeli bond investments from 15% to 20%.
With $135 million in Israeli bonds maturing on Nov. 1, Committee Chair and County Commissioner Gregg Weissproposed the increase to allow the funds to be reinvested. That can happen only if the cap is raised to 20%.
Weiss said he proposed the change to give the Clerk’s office flexibility to raise the allocation to 20% if warranted.
Since the brutal terrorist attacks on Israelis three years ago, county officials have purchased roughly 10-digits
worth of the bonds in a show of support for the U.S. ally in the Middle East.
But during the discussion on lifting the cap, the core consideration was the value and worthiness of the bonds as an investment rather than politics or diplomacy.
The cap is based on the portfolio’s allocation when an investment is purchased. The latest figures show that nearly 24% of the county’s funds are invested in Israeli bonds, so proceeds from maturing bonds will have to be invested in other securities.
Supporters and opponents of the county’s Israeli bonds investment policy recently clashed during a heated County Commission meeting on Oct. 6 that ended with multiple people being removed from the chamber.
With $1 billion invested, Palm Beach County is the world’s largest public-sector investor in Israeli bonds.
Opponents argue the investments help finance what they describe as genocide in Gaza and the West Bank.
Why Palm Beach County won’t reinvest $67.5 million in Israel bonds
Critics of the Israel bond buys also point out that major rating agencies have downgraded Israel’s sovereign credit rating since the war in Gaza began, although the bonds remain investment grade.
One speaker opposed to raising the cap questioned the wisdom of concentrating so much money in a single investment category.
Supporters counter that Israel bonds have a long repayment history and offer yields above comparable U.S. government securities.
The county investment committee nonetheless limited the terms to three-year bonds but also said the county’s cash-flow situation must be considered, which could affect future Israel bond investments.
County policy requires investment decisions to rely solely on “pecuniary factors,” or financial risks and returns.
Interim County Clerk Shannon Ramsey-Cheesman said in an interview that the clerk’s investment team would likely not recommend investing in Israel bonds if they are downgraded to junk status.
Weiss said the investments have made financial sense for the county, noting that they often yield 50 or more basis points higher than U.S. Treasuries.
But critics have repeatedly warned county officials that it is unwise to have such a large concentration in any single issuer, regardless of yield.
The county commission is expected to act on the Investment Policy Committee recommendations later this year. The commission generally accepts its recommendations.
Mike Diamond is a journalist atThe Palm Beach Post, part of the USA TODAY Florida Network. He covers Palm Beach County government. You can reach him at mdiamond@pbpost.com. Help support local journalism. Subscribe today.
This article originally appeared on Palm Beach Post: County committee keeps 15% cap on Israel bond purchases
