By Libby George

LONDON Israel has raised $200 million from diaspora bond sales since the war with Hamas began, Israel Bonds said in a statement.

The group, the government's vehicle for diaspora bonds, said that U.S. state and local governments accounted for $150 million of the purchases.

"The response across many U.S. states was immediate and demand exceeded the amount of Israel bonds that we were able to sell at that time," Dani Naveh, president at Israel Bonds, said in a statement.

Israel, which has one of the most successful diaspora bond programmes in the world, launched a bond-selling campaign on Tuesday to support the country during the war with the Palestinian militant group Hamas.

The war, and its potential disruption to the economy, pushed the cost of insuring Israel's debt against default to 109 basis points on Wednesday, according to S&P Global Market Intelligence.

That is a more than 80% jump to the 5-year credit default swaps, as the instruments are known, from before the Hamas attacks on Israel on Saturday, and marks their highest level since November 2013.

Ratings agency Moody's, which is scheduled to review Israel's "A1 stable" rating on Friday, warned earlier this week that a prolonged war with Hamas could weigh on the country's credit score.

Israel Bonds said it reached its standard annual goal to raise $1 billion before the war began. As of Dec. 31, it had $5.4 billion worth of outstanding bonds, representing approximately 12% of Israel's external governmental debt.

(Reporting By Libby George, editing by Karin Strohecker and Emelia Sithole-Matarise)