A huge NIS 3 billion financing round by Mizrahi Tefahot Bank (TASE:MZTF) at the end of last week led a record NIS 7.2 billion month in corporate bond issues in January, according to figures from the Midroog rating company.
The Mizrahi Tefahot issue, which was over-subscribed, consisted of a series of index-linked bonds at 0.62% interest, payable in 2016-2020. The issue by the bank, managed by CEO Eldad Fresher, indicates continued dominance by the banks of the issuers market, as was also the case last year.
Mizrahi Tefahot Bank was preceded by Dexia Israel (Public Finance) Ltd. (TASE:DXIL) and First International Bank of Israel (TASE: FTIN), which raised NIS 700-750 million each in January, making the banks responsible for over 60% of the total amount raised in corporate bond instruments in January. The Midroog figures also indicate that in addition to the banks, real estate firms continue to account for a respectable share of the amount raised on the corporate bond market: NIS 1.7 billion, or 24% of the market total. The standout in this sector was income-producing real estate giant Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT), which raised NIS 750 million.
Other prominent companies in this aspect included IDB Development Corporation Ltd. (TASE:IDBD), which raised NIS 375 million (and about the same amount through an issue of rights); Big Shopping Centers (2004) Ltd. (TASE:BIG) and real estate investment trust (REIT) Sella Capital Real Estate Ltd. (TASE: SLARL), which raised NIS 250 million each; and YH Damari Construction and Development, which raised NIS 165 million. REIT 1 also announced today that it had completed a NIS 120 million financing round through an extension of its bond series, making a total of over NIS 200 million raised, together with the proceeds from its share offering. Both offerings were private placements.
Azrieli Group Ltd. (TASE: AZRG) is planning a major NIS 700 million bond issue, rated AA+ by S&P Maalot, in the near future. Midroog notes that other prominent bond issuers in January included Adama Holding Ltd. (TASE:ADMA.B1) (formerly Makhteshim Agan), which raised NIS 535 million in a private placement, and S. Shlomo Holdings Ltd. (TASE:SHLD) which raised over NIS 260 million.
Several hundred millions shekels more was raised in January through offers to purchase by Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) (these have not yet been completed).
"Raising money in the shadow of uncertainty"
Midroog CEO Eran Heimar today said, "Today's interest rate and investment environment supports further large-scale capital raising by companies and banks in continuation of what happened in 2014. January featured major financing rounds by large and relatively financially strong companies, and we expect a more diverse composition of issuers later on. We believe that the current year for offerings will be in the shadow of a relatively large degree of economic uncertainty, given the elections campaign and the expectations of an interest rate hike."
The intensive activity in the market in January continues the trend from 2014, which was a record year in bond issues on the Tel Aviv Stock Exchange (TASE), with a total of NIS 42 billion raised, 20% more than in 2013. This trend is attributable to last year's prevailing conditions in the local and global financial markets, which feature a low interest rate environment and surplus liquidity.
Published by Globes [online], Israel business news - www.globes-online.com - on February 1, 2015
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