STATE OF ISRAEL - Gov

Dated 9 September 2014STATE OF ISRAEL 7,000,000,000Euro Medium Term Note ProgrammeUnder the Euro Medium Term Note Programme (the "Programme") described in this document, State ofIsrael (the "Issuer" or "Israel") may from time to time issue Notes (as defined herein). Any Notes issuedunder the Programme on or after the date of this document are issued subject to the provisions describedherein. This does not affect any notes already issued.Pages i to 75 (inclusive) of this document comprise a base prospectus (the "Base Prospectus") for thepurposes of Article 5.4 of the Prospectus Directive (as defined herein) in respect of notes ("PD Notes" or"Notes") to be offered to the public in the Relevant Member States (as defined herein) and/or to beadmitted to the Official List of the Financial Conduct Authority (in its capacity as competent authority forthe purposes of Part VI of the Financial Services and Markets Act 2000 as amended, the "UK ListingAuthority") and admitted to trading on the Regulated Market of the London Stock Exchange plc (the"London Stock Exchange").Pages 75 to 114 (inclusive) of this document comprise an offering circular (the "Offering Circular"),which has been prepared by the Issuer in connection with the issue of notes other than PD Notes ("NonPD Notes"). The Offering Circular has not been reviewed or approved by the UK Listing Authority anddoes not constitute a base prospectus for the purposes of the Prospectus Directive.Applications have been made for PD Notes issued during the period of 12 months from the date of theBase Prospectus to be admitted to the Official List of the UK Listing Authority and to trading on theRegulated Market of the London Stock Exchange, which is a regulated market for the purposes ofDirective 2004/39/EC (the "Markets in Financial Instruments Directive").The Notes may be issued on a continuing basis to one or more of the Dealers specified herein and anyadditional Dealer appointed under the Programme from time to time, which appointment may be for aspecific issue or on an ongoing basis (each a "Dealer" and together the "Dealers"). References in theBase Prospectus to the "relevant Dealer" shall, in relation to any issue of Notes, be to the Dealer orDealers agreeing to purchase such Notes. Notes may be denominated in any currency agreed between theIssuer and the relevant Dealer provided that no PD Notes may be issued under the Programme whichhave a minimum denomination of less than 1,000 (or equivalent in another currency).Notes of each Tranche (as defined herein) will (unless otherwise specified in the applicable Final Terms)initially be represented by a temporary global Note which will be deposited on the issue date thereof (the"Issue Date") with a common depositary on behalf of Euroclear Bank SA/NV ("Euroclear"),Clearstream Banking, société anonyme ("Clearstream, Luxembourg") and/or any other agreed clearancesystem and which will be exchanged, as specified in the applicable Final Terms, for either a permanentglobal Note or Notes in definitive form, in each case upon certification as to non–U.S. beneficial ownershipas required by U.S. Treasury regulations. A permanent global Note will be exchangeable for definitiveNotes, in the circumstances described in such permanent global Note, all as further described in "Form ofthe Notes" below.There are certain risks relating to any issue of Notes, which investors should ensure they fully understand(see "Risk Factors" on pages 14 to 21 (inclusive) of the Base Prospectus and "Risk Factors" on page 84 ofthe Offering Circular regarding additional risks relating to the Non PD Notes).ArrangerBarclaysDealersBarclaysDeutsche BankMorgan StanleyCitigroupGoldman Sachs InternationalUBS Investment Bank

Table of ContentCREDIT RATINGS . 5IMPORTANT NOTICES . 6Responsibility for the Base Prospectus . 6Public Offers of Notes in the EEA . 6Consent . 6Common Conditions to Consent . 4ARRANGEMENTS BETWEEN INVESTORS AND AUTHORISED OFFERORS . 4Public Offers: Issue Price and Offer Price . 5Other relevant information . 5Unauthorised information . 5Restrictions on distribution . 5Investment considerations . 6Final Terms or Drawdown Prospectus . 7Stabilisation . 7DEFINITIONS . 8SUMMARY OF THE PROGRAMME AND TERMS AND CONDITIONS OF THE PD NOTES. 1SECTION A – INTRODUCTION AND WARNINGS . 1SECTION B – THE ISSUER. 2SECTION C – THE NOTES . 5SECTION D – RISKS . 9SECTION E – OFFER . 10SECTION E – OFFER . 11INFORMATION INCORPORATED BY REFERENCE . 12RISK FACTORS . 14Factors that may affect the Issuer's ability to fulfil its obligations under Notes issued underthe Programme. 14Factors which are material for the purpose of assessing the market risks associated with Notesissued under the Programme . 16FORM OF THE NOTES . 22FORM OF FINAL TERMS . 24PART A – CONTRACTUAL TERMS . 24PART B — OTHER INFORMATION . 30SUMMARY OF THE ISSUE . 33STATE OF ISRAEL. 34PART A – CONTRACTUAL TERMS . 34PART B — OTHER INFORMATION . 40SUMMARY OF THE ISSUE . 40TERMS AND CONDITIONS OF THE PD NOTES . 411.Form, Denomination and Title . 422.Status of the Notes . 433.Interest . 43a)Interest on Fixed Rate Notes . 43b)Interest on Floating Rate Notes . 45c)Accrual of Interest . 524.Payments . 52a)Method of Payment Subject as provided below: . 52b)Presentation of Notes and Coupons . 53c)Payment Day . 54d)Interpretation of Principal and Interest . 55e)Payment of U.S. Dollar Equivalent. 555. Redemption and Purchase . 56a)At Maturity . 56b)Redemption at the Option of the Issuer (Issuer Call) . 56c)Redemption at the Option of the Noteholders (Investor Put) . 57d)Early Redemption Amounts . 57e)Purchases . 58f)Cancellation . 58g)Late payment on Zero Coupon Notes. 586. Taxation . 587.Prescription . 598.Events of Default . 59- ii -

9.Replacement of Notes, Coupons and Talons. 5910.Agent and Paying Agents . 5911.Exchange of Talons . 6012.Notices . 6013.Meetings of Noteholders, Modification and Waiver . 61a)General . 61b)Electronic Consent and Written Resolution . 6114.Further Issues. 6215.Governing Law and Submission to Jurisdiction. 6216.Third Party Rights . 63USE OF PROCEEDS . 64SUBSCRIPTION AND SALE . 65United States . 65Public Offer Selling Restriction under the Prospectus Directive . 65United Kingdom . 66The Netherlands . 66Japan. 67People's Republic of China . 67Hong Kong. 67Singapore . 68General . 68THE AUTHORISED OFFEROR TERMS . 701.General . 702.United Kingdom . 723.Indemnity . 724.Governing Law and Jurisdiction . 72GENERAL INFORMATION . 74Authorisation. 74Taxation . 74Listing of Notes . 74Governmental, Legal and Arbitration Proceedings . 74No Significant Change . 74Documents Available . 74Auditing or Independent Review Procedures on the Accounts of the Issuer. 75Clearing Systems . 75EU Savings Directive . 75Proposed Financial Transactions Tax ("FTT") . 75Floating Rate Notes. 76Issue Price and Yield . 76Regulation S . 77OFFERING CIRCULAR. 76IMPORTANT NOTICES . 77Responsibility for the Offering Circular. 77Other relevant information . 77Unauthorised information . 77Restrictions on distribution . 77Investment considerations . 78Pricing Supplement . 78Supplemental Offering Circular. 79Stabilisation . 79OVERVIEW OF THE PROGRAMME WITH RESPECT TO NON PD NOTES . 80RISK FACTORS . 84Risks related to Non PD Notes . 84FORM OF PRICING SUPPLEMENT . 85PART A – CONTRACTUAL TERMS . 85PART B — OTHER INFORMATION . 91TERMS AND CONDITIONS OF THE NON PD NOTES . 921.Form, Denomination and Title . 932.Status of the Notes . 943.Interest . 94a)Interest on Fixed Rate Notes . 94b)Interest on Floating Rate Notes . 96c)Accrual of Interest . 1023.Payments . 102- ii -

a)Method of Payment Subject as provided below: . 102b)Presentation of Notes and Coupons . 103c)Payment Day . 104d)Interpretation of Principal and Interest . 104e)Payment of U.S. Dollar Equivalent. 1054.Redemption and Purchase . 106a)At Maturity . 106b)Redemption at the Option of the Issuer (Issuer Call) . 106c)Redemption at the Option of the Noteholders (Investor Put) . 107d)Early Redemption Amounts . 107e)Purchases . 108f)Cancellation . 108g)Late payment on Zero Coupon Notes. 1085.Taxation . 1086.Prescription . 1097.Events of Default . 1098.Replacement of Notes, Coupons and Talons. 1099.Agent and Paying Agents . 10910.Exchange of Talons . 11011.Notices . 11012.Meetings of Noteholders, Modification and Waiver . 110a)General . 110b)Electronic Consent and Written Resolution. 11113.Further Issues. 11214.Governing Law and Submission to Jurisdiction. 11215.Third Party Rights . 113- ii -

CREDIT RATINGSAs of the date of the Base Prospectus, the long-term foreign currency sovereign credit ratings of theIssuer are: A1 (Moody's Investors Service, Inc.), A (Standard & Poor's Credit Market Services EuropeLimited) and A (Fitch Ratings Ltd). The Programme has also been rated (P)A1 by Moody's InvestorsService, Inc., A by Standard & Poor's Credit Market Services Europe Limited and A by Fitch RatingsLtd.Standard & Poor's Credit Market Services Europe Limited and Fitch Ratings Ltd are both established inthe European Economic Area (the "EEA") and registered under Regulation (EU) No 1060/2009, asamended (the "CRA Regulation"). Moody's Investors Service, Inc. is not established in the EEA and isnot certified under the CRA Regulation; however ratings issued by it are endorsed by Moody's InvestorsService Ltd., which is established in the EEA and registered under the CRA Regulation.Notes issued under the Programme may be rated or unrated. Where an issue of Notes is rated, theapplicable rating(s) will be specified in the applicable Final Terms. Such rating(s) will not necessarily bethe same as the ratings assigned to the Issuer, the Programme or to notes already issued.The European Securities and Markets Authority ("ESMA") is obliged to maintain on its website,www.esma.europa.eu, a list of credit rating agencies registered and certified in accordance with the CRARegulation. This list must be updated within five working days of ESMA's adoption of any decision towithdraw the registration of a credit rating agency under the CRA Regulation. Therefore, such list is notconclusive evidence of the status of the relevant rating agency as there may be delays between certainsupervisory measures being taken against a relevant rating agency and the publication of the updatedESMA list.In general, European regulated investors are restricted from using a rating for regulatory purposes if suchrating is not issued by a credit rating agency established in the EEA and registered under the CRARegulation unless (1) the rating is provided by a credit rating agency not established in the EEA but isendorsed by a credit rating agency established in the EEA and registered under the CRA Regulation or (2)the rating is provided by a credit rating agency not established in the EEA, but which is certified underthe CRA Regulation.A security rating is not a recommendation to buy, sell or hold securities and may be subject tosuspension, reduction or withdrawal at any time by the assigning rating agency.- ii -