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The government-controlled phone company Bezeq plans to issue bonds bearing variable interest for the first time in its history.

The investment house Leader will be managing an NIS 250 million placement of unlinked debentures for the Tel Aviv Stock Exchange-traded Bezeq phone company with institutional investors.

Leader is a subsidiary of the TASE-traded Shrem Fudim Kelner group.

Bezeq will be offering institutionals two kinds of bonds: a three-year bond bearing fixed interest, and four-year bonds, on average, bearing variable interest.

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This will be the first time that the phone company offers bonds bearing variable interest, essentially based on key lending rates set by the Bank of Israel. The yield will be determined by an auction for institutional investors. Under present market conditions, the yield will probably range from 8% to 8.5%, substantially higher than the yield on bank deposits.

The auction is scheduled to take place in about 10 days' time.