US real estate company ECI Holdings unexpectedly canceled its bond issue on the Tel Aviv Stock Exchange (TASE), despite its relative success in the preliminary stage for the public issue, led by Leumi Partners Ltd..
ECI, owned by the Hirsch and Greenberg families, was trying to raise NIS 500 million shekels in bonds with an average duration of 4.6 years, at a maximum interest rate of 6.7%. S&P Maalot gave the bonds an A rating.
In yesterday's tender for investment institutions, demand totaled NIS 470 million. Reducing the size of the issue to NIS 400 million (NIS 340 million for the institutional tender) would have enabled ECI to issue its bonds at 6.25% interest. Nevertheless, after opening the envelopes, the company, led by chairman and CEO Seth Greenberg, decided to cancel the entire proceeding and consider other financial alternatives.
Two other companies with the same rating that raised similar amounts in November 2014, Spencer Equity and All Year Holdings, paid interest rates of only 5.1% and 5.85%, respectively, on bonds with an average duration of 4.5-5 years. It cannot be ruled out that the estimates in the US of the interest that would have to be paid to investors in Israel were far from the true situation.
Another foreign real estate company, Strawberry Fields, which also won an A rating, held its institutional tender last week, and received NIS 225 million in orders for bonds with a 3.9 year average duration at 6.4% interest.
Published by Globes [online], Israel business news - www.globes-online.com - on November 24, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015