Dollar Triple A raises only NIS 430m in institutional IPO

Tel Aviv Stock Exchange Photo: Eli Yizhar

The company holds NIS 2 billion in bonds rated AAA by S&P Maalot with a stable outlook.

The negative sentiment on the markets in recent days has also affected large debt issues by Israeli companies, including that by Dollar Triple A. At the same time by the issue by US company UIRC was failing, Dollar Triple A announced the completion of the institutional part of its issue, in which it raised NIS 430 million. This is a substantial sum, but it is less than half of the company's maximum target of NIS 1 billion. The interest rate for the bonds was set at the stipulated maximum - 2.9%.

The company is planning to hold the public part of its issue in the coming days. Dollar Triple A is offering bonds, and will use the proceeds to buy US dollars, which it will deposit in approved accounts in local banks, thereby making it possible to invest in a marketable dollar bank deposit.

The bonds, which have a duration of 5.6 years, ensure dispersal among the banks, and set a maximum of 50% of the proceeds for a deposit in a single bank. The principle and interest of the bonds will be paid in shekels, linked to the shekel dollar rate, and will be payable in 2023.

Former bankers Shlomi Friedman and Shimon Vaknin control Dollar Triple A through Gilboa Banks, a private company. Epsilon Investment House Ltd. is leading the issue. Dollar Triple A aims to "enhance the company's profits, among other things by trying to obtain as wide an interest rate spread as possible between the interest rate that the company has undertaken to pay on its bonds and the interest to which it will be entitled on its bank deposits."

In advance of the issue, Maalot explained that the proceeds from the bond issue "will be deposited in supporting banks with a local rating of at least AAA or a global rating of A minus," and that the advance rating given to the issuing company "is linked to the lowest of the ratings of the supporting banks: Bank Leumi (TASE: LUMI), Bank Hapoalim (TASE: POLI), and Mizrahi Tefahot Bank (TASE:MZTF)."

Maalot added, "The main risk, that the bondholders will not receive their money on time, depends on the bank issuing the supporting deposit being able to pay its obligations on time, subject to the deposit agreement."

Published by Globes [online], Israel Business News - www.globes-online.com - on August 13, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Tel Aviv Stock Exchange Photo: Eli Yizhar
Tel Aviv Stock Exchange Photo: Eli Yizhar
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