NEW YORK - Even though he has headed Israel Bonds for only half a year, Yehoshua Matza could be considered one of the notoriously inefficient organization's most successful presidents. Since his arrival to New York in February, Israel Bonds has recorded record-breaking sales. By the end of July it had raised $861 million, 32% more than the previous year. The treasury has asked Israel Bonds to raise $1.25 billion by the end of the year, and if current sales figures hold, they will probably leap betond that goal. Matza may claim the accolades, but the real credit goes to Joel Gutterman, who has been running the organization since Matza, a former Likud MK, took up office. Gutterman is responsible for the field work, and knows all the ins and outs of the organization down to its tiniest detail. The Finance Ministry also deserves some credit, particularly accountant-general Nir Gilad. Ultimately, the sales of bonds are a result of the interest rates the treasury sets for them. The higher the interest rate compared to American market rates, the better the sales. So how does an organization infamous for its inefficiency turn into a success story when Israel's economic and political situation is sputtering, at best? The 300-person organization was established as an American company at the time of the founding of the state to raise foreign currency for Israel. It costs the Israeli taxpayer about $40 million a year, not counting the interest Israel pays on the bonds. As an American company, it is not subject to State Comptroller reviews, and is only loosely monitored by the treasury. On the one hand, it is a mongrel corporation that is part charity, while on the other hand it is a legitimate financial institution with a long history and tradition. The two reasons for it recent success are the wave of sympathy for Israel, particularly since early this year, when suicide bombings outraged the world, and the attractive interest rates on bonds at a time when U.S. interest rates are its lowest in decades. And Israel Bonds is now succeeding where it failed for years - sales to individuals. Over the last decade, the Bonds' sales efforts were aimed at individuals, but they usually failed. For a while, bar mitzvah bonds were issued just to beef up numbers of individual bonds sold, but that drew only marginal interest. And in the 1990s, bonds were far less popular than stocks in the United States. But political events in the Middle East combined with the U.S. economic slowdown has made Bonds particularly attractive to Jews who are looking both to support Israel and to make some money. Nonetheless, the main buyers of Israel Bonds are institutions, including banks, pension funds and organizations with some connection to Israel. The bonds are considered practically risk free, partly because Israel has never defaulted on any loan and partly because nobody in the United States believes that Washington would ever let Israel reach that point. Anyone buying an Israel Bond nowadays is striking a good deal considering that U.S. Treasury bonds are at their lowest rates since the 1960s (4.1% for 10-year bonds), while Jubilee or Zero Coupon Israel bonds are getting 6.25 to 6.6% interest. Boeing, at one of its lowest points in history, recently issued 10-year bonds to private investors with a 5.6% interest rate. The same holds true for five-year bonds. U.S. Treasury bonds are offering 3.4%. IBM is offering 4.2% and Israel Bonds is offering 4.75%. The state of the stock market is helping matters even further. The Nasdaq is down, the Dow is down, everything appears down, and savings accounts are offering a bare 1.5% annual rate for short-term deposits. The only real bargain in the United States these days are mortgages, with rates around 5.5-6%. Relatively speaking, of course, an investment in Bonds suddenly looks good for private investors. Israel Bonds and the treasury claim the bonds are not liquid, and that it costs Israel a premium. But over the years, all sorts of methods have been set up to cash in Israel Bonds before they reach maturity. Some can be cashed in after a year on a trip to Israel. And those who really need the cash can put them up as collateral at a bank for a loan.