After more than 20 foreign real estate companies operating in the US held bond issues on the Tel Aviv Stock Exchange (TASE), raising an aggregate NIS 16 billion, the TASE is now launching a new bond index, the Tel Bond Global, based on shekel bonds of foreign real estate companies.
The TASE says that the bonds on this index are traded at higher yields than the bonds on the Tel Bond-Shekel index, which has the same rating as the Tel Bond Global index. The bonds listed on the Tel Bond Global index will also continue as part of the existing indices.
The new index, which will be launched on July 16 (according to the figures at the end of trading on July 6), will be made up of 25 bond series with an aggregate market value of NIS 14.5 billion, mostly from the real estate sector. The index will include unlinked bonds at fixed interest with a rating of at least A minus from Maalot or A3 from Midroog. The maximum weight of each bond series included on the index is 6%.
Designed for long, short, and hedge investors
18 companies are expected to be on the index, some of which will have more than one bond series on it. The Zarasai Group is expected to lead the index with an 11.1% weight (the maximum weight for a company is 20%). As of now, the index has a gross internal weighted yield of 4.7% and a weighted duration of 3.6 years.
The TASE added that the new index is appropriate for three main types of investors: long investors seeking to diversify their investment portfolio with high-rated bonds having better yields; short investors who believe that the bonds' rating does not reflect their risk, and that they are therefore overpriced; and hedge investors holding bonds in this sector and seeking to hedge their investment through short instruments on the index.
Many foreign real estate companies have issued bonds on the local capital market. 50 such bond series are currently traded on the TASE, amounting to almost 10% of all the bond series in the corporate market in Israel. More new series are expected to be added in the near future, some by companies that have never before issued securities on the TASE.
A majority of the series in this instrument are rated A or higher. 73% of the series are rate A, and 25% are rated AA or higher. 85% of the series issued by foreign real estate companies are unlinked shekel bonds. The same is true of most of bonds issued in recent years, because of the decline in demand for index-linked bonds on the TASE.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 19, 2017
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