With IDB Holding and IDB Development bonds continuing their deep dive into junk bond territory, S&P Maalot finally acknowledged what investors already seemed to know. The credit rating agency jumped on the bandwagon late Sunday by downgrading the debt of both companies. IDB Holding was reduced from A- to BBB- with a negative outlook, while IDB Development dropped just a notch from A- to BBB +, also with a negative outlook.
All seven bond series of both companies reacted yesterday by falling further, by another 4% or more.
Maalot reported on the group's three subsidiary holdings companies - Discount Investment Corp., Clal Industries and Investments, and Koor Industries - leaving their status at A- but changing the outlook for all three to negative, indicating that they could face a downgrade during the coming year.
Nochi Dankner, controlling owner of the IDB group companies, reacted publicly to the recent slide for the first time on Sunday evening. With IDB Holding series B3 bonds trading at a 46.9% yield after peaking at nearly 70% last week, Dankner said existing funds are sufficient to cover bond payments for the next two years.
"Even during the best of times, in 2004-2005, we held liquid balances for the next a year and a half," he noted. "The group has never held liquid balances beyond what was needed to pay its debts over the next year or two, and there is no reason we should do so now."
As of the opening of yesterday's trading, yields ranged from 28% to 47% on IDB Holding bonds and from 12.5% to 20% on IDB Development bonds. Bonds of the three surveyed holding subsidiaries ranged from 3.5% to 10.1%.
