Standard & Poor's Maalot Ltd. today slashed its rating for Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) bonds by ten levels: from BBB+ to CCC, a level tantamount to a speculative investment. The move comes exactly one year after Maalot downgraded the company's bonds from AA to A.
Africa-Israel's executives were infuriated by Maalot's downgrade a year ago, and described the rating company's work as "superficial, with no understanding, without skill, following fashion, astonishing, and irrelevant."
Today, after Africa-Israel posted a NIS 1.52 billion net loss (NIS 1.3 billion attributable to shareholders) for the second quarter, its executives have chosen discretion over hectoring.
Maalot warned that the continuation of the crisis in Africa-Israel's core real estate markets - the US, Russia, and Eastern Europe - is adversely affecting the company's financial soundness and liquidity. Maalot gave the company's bonds a "Negative" outlook as well, indicating expectations of a further downgrade if the company reaches a settlement with its bondholders. In other words, Maalot could downgrade Africa-Israel's bonds to D - the lowest possible rating.
Despite the drastic downgrading, Africa-Israel's share climbed 8.1% today after falling by 25.5% and 13.6% over the preceding two days.
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2009
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