Business in Brief
Knesset passes law anti-haircuts law, protecting bondholders
The Knesset yesterday passed the so-called Haircut Law mandating the courts to appoint supervisors with appropriate professional qualifications to oversee any debt restructuring or any situation involving changes in repayment terms, to ensure that the rights of bondholders are protected. The law, which won the support of 32 MKs and faced no opposition, will apply only to debt restructuring declared 45 days from now, not to pre-existing restructuring. "This is a victory of the public over the system and tycoons that have made the haircuts," said MK Zahava Gal-On (Meretz ), referring to the practice of asking bondholders to assume big losses in restructuring. (Zvi Zrahiya)
BoI expects interest rates to stay unchanged until end of 2013
The Bank of Israel's research department expects interest rates to remain unchanged at least through to the end of 2013. The department made its forecast during the central bank's discussions prior to setting the interest rate for July, when it decided to lower rates by 0.25%, to 2.25%. The meetings were held on June 24 and June 25. The main argument in favor of reducing the interest rate was its "contribution to strengthening the Israeli economy's ability to deal with the impact of potential negative consequences from the global economy, by maintaining the rate of inflation near the center of the target range," wrote the central bank. In addition, "macroeconomic data around the world indicated a further slowdown in growth, and projections of international organizations were revised downward. The level of economic risk in the world due to developments in Europe remained high, and with it the concern over negative effects on the domestic economy." The Bank of Israel said most indicators of Israeli economic activity point to a continuation of growth at a moderate rate of around 3% on an annual basis. (Moti Bassok)
Israel Electric raises NIS 2.9b in bond issue to cover rising fuel costs
State-owned Israel Electric Corporation said yesterday it raised NIS 2.9 billion in a bond offering yesterday, as it seeks to meet higher fuel costs and avoid power outages. The proceeds will be used by IEC to buy more expensive fuel, such as diesel, after Egypt halted natural gas supplies in April. "The cost of fuel to produce electricity is NIS 100 million a day, so we needed to raise money immediately to improve the company's cash flow," said Eli Glickman, IEC's chief executive. IEC sold three series of bonds - NIS 1.4 billion of one-year bonds at an interest rate of 2.25%, NIS 1 billion of inflation-linked three-year bonds paying 0.65%, and NIS 500 million of inflation-linked five-year bonds paying 1.2%. Standard & Poor's rates IEC's bonds BB +. Its debt is on CreditWatch, with negative implications. (Reuters )
Knesset committee approves restrictions on advertising of alcohol
The Knesset Economics Committee yesterday approved an amendment to the law on alcohol advertising that will almost entirely ban advertising for hard drinks on buses in a move its sponsor, MK Danny Danon (Likud ), said is aimed at discouraging underage drinking. The legislation also restricts advertising of alcohol in other media, in the interest of having it be directed mainly at adults. The law also prohibits using role models such as sports stars and fashion models to sell alcohol and will require advertisements to carrying warnings that "excessive consumption of alcohol is life-threatening and harmful to your health." The Knesset research unit estimates that about 60% of all Israeli youth consume alcoholic beverages. (Zvi Zrahiya )
Record number of tourists
This year is shaping up to set records for incoming tourism.
In January-June, 1.7 million people visited Israel, a 6% increase from the first half of 2011, the Central Bureau of Statistics said yesterday. Of those, 1.4 million were tourists, up 3% from the the same time last year.
June also set a record as some 285,000 arrived, a 9% increase from a year ago. Of those, 242,000 were tourists, up 6%.
The number of day visitors also recovered after the Arab Spring and the change of government in Egypt. scared away many tourists last year and earlier this year. (Rina Rosenberg )