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Maalot, an Israeli credit-rating company, is reevaluating the credit ratings it has given Israeli companies in the past to reflect the economic downturn. "We are very concerned with the business situation and the financial standing of companies in Israel," Maalot's CEO, Gad Be'eri, said yesterday.

Maalot, which rates firms that issue bonds on the Tel Aviv Stock Exchange, is concerned mainly by the crisis in the banking sector, which will inevitably project on companies that work with the banks as well.

Since the banks' results are falling, they will have to reduce the scope of outstanding loans, which will make it difficult for companies to repay their bonds. Until now, the banks came to the rescue in cases when companies had liquidity problems that made it difficult for them to repay bonds. "Now, the banks are not so easy with the money," Be'eri said.

Because of the recession, companies that invested in equity (like the purchase of real estate that was put down as collateral against loans) may find it hard to raise the money to repay their bonds. The recent devaluation of the shekel has further worsened the situation of companies that did not implement suitable hedging.

Real estate companies are better off than holding companies, which will encounter more problems in securing loans, and will therefore have to liquidate assets, Be'eri said.