The Israeli market appears to have soured on foreign bond issues.
Despite the volatility and higher yields in the government bond market in recent weeks, business in the corporate bond market has been lively, led by financial and real estate companies. The latest news is a huge bond issue of up to NIS 2.5 billion planned for the near future by Bank Leumi (TASE: LUMI), which received ratings of AAA and Aaa from Midroog and Maalot, respectively. The Bank Leumi offering follows major offerings earlier this month by Mizrahi Tefahot Bank (TASE:MZTF) (NIS 1.8 billion), Bank Hapoalim (TASE: POLI) (NIS 2.1 billion), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) (NIS 1.1 billion), and Israel Electric Corporation (IEC) (TASE: ELEC.B22) (NIS 925 million).
Local real estate companies are also taking advantage of the strong market demand. Azrieli Group Ltd. (TASE: AZRG) today announced that the institutional part of its offering had been oversubscribed, ensuring that NIS 600 million would be raised. Housing and Construction Holding Co.(Shikun u'Binui) (TASE: HUCN) also enjoyed oversubscription in its institutional tender, reporting last week that it had ensured proceeds of NIS 340 million from its bond series. Income-producing real estate company Amot Investments Ltd. (TASE:AMOT), a subsidiary of Alony Hetz Property and Investments Ltd. (TASE: ALHE) obtained an Aa3 rating from Midroog for a series of up to NIS 400 million this week.
For all the strong demand, some companies are encountering difficulty in raising debt as a result of a change in the market mood. The most prominent case is the delay in the NIS 1.5-2 billion issue by US real estate company Wharton Properties and the NIS 250 million issue planned by US real estate development company JDS.
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2015
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Bank Leumi branch picture: Tamar Mitzpi