Demand high for Isrotel, Zarasai bonds

Isrotel Sport Eilat
Isrotel Sport Eilat

Isrotel's bond offering was more than six-times oversubscribed, and closed at 2.45%.

Following the Jewish holiday season, in which there were few bond offerings on the Tel Aviv Stock Exchange, the market has warmed up again quickly, and public companies are once more exploiting the appetite of investment institutions for relatively high returns.

The institutional stage of the initial offering of bonds by Isrotel Ltd. (TASE: ISRO) on Sunday was highly successful. The bond bears shekel interest and is backed by a first lien on the Agamim Hotel in Eilat, and received an A1 rating from Midroog.

Isrotel offered the institutions interest of 3.5% on the bond, with a three-year duration. Demand was more than six times the amount that the company sought to raise (NIS 200 million), and the tender closed at an interest rate of 2.45%, with the company fulfilling orders to the tune of NIS 157 million. It will raise a further NIS 40 million in the public stage. The offering was led by Barak Capital.

Isrotel, 90% controlled by the Lewis family, has a market cap of NIS 1.5 billion after an 80% rise in its share price in the past year. It operates seventeen hotels, eight of them in Eilat.

Another company that found high institutional demand for a bond offering was Joel Weiner's Zarasai Group, which operates in homes for rent in New York. The company, which sought to raise NIS 200 million in an expansion of its C series bond, increased the offering to NIS 300 million following demand of over NIS 800 million. S&P Maalot rates the bond AA- and Midroog Aa3. The offering was led by Poalim IBI. The shekel bond will be repaid in 18 payments from May 2019. It has a duration of 5.8 years and is traded at a yield of 4.2%.

The Zarasai Group, a unit of Weiner's Pinnacle Group, owns 8,715 apartments in central New York. It is considered one of the better North American real estate companies to have exploited the demand for high quality debt on the Tel Aviv market. It posted an operating profit of $40 million in the first half of 2016, 50% higher than in the corresponding period of 2015, and had FFO (funds from operations) of $20 million.

Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Isrotel Sport Eilat
Isrotel Sport Eilat
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