Ticker: Bank of Israel Holds Interest Rate Unchanged Again

IDB wants more time to sell Clal Insurance; TowerJazz rejects suit over accounting methods; Telecoms shares lead Tel Aviv lower.

The Bank of Israel headquarters in Jerusalem.
Reuters

The Bank of Israel said Monday it was leaving its base lending rate at 0.1% for February, citing some improvement in Israel’s economic performance but continued indications of declining inflation for the short and medium term. It cited figures from private sector economists forecasting an average increase of just 0.3% in the consumer price index over the next 12 months, down from 0.5% a month ago and well below the government’s target of 1-3%. The bank, which last cut the rate 11 months ago to its current record low, expressed concern about rising home prices and volatile world financial markets but gave no other indications about how and when it would act if needed, said Idan Azoulay, CEO of Epsilon Mutual Funds. Jonathan Katz, chief economist at Leader Capital Markets, said that in the current environment, no rate hike should be expected before 2017. “It’s difficult to see them using unconventional tools, like quantitative easing, because the economic situation isn’t really that bad,” Katz said. (Omri Zerachovitz)

IDB may seek more time to sell Clal Insurance

IDB Development is likely to seek extra time from the government to sell its controlling stake in Clal Insurance after a deal to sell it to China’s Microlink failed nearly three weeks ago. Sources told TheMarker that since Microlink pulled out January 6, IDB has been approached by a handful of potential buyers from Western countries but none of them have come close to Microlink’s offer to buy 55% of the insurer for 2.45 billion shekels ($620 million). Without a buyer, IDB has to come to Dorit Salinger, the treasury commissioner for the capital market, insurance and savings, with a plan to sell Clal shares in the stock market, starting with a 5% stake on May 7. But IDB is still hoping a buyer will emerge with an offer that values Clal at more than it could get through a public share sale. Meanwhile, Eduardo Elsztain, IDB’s controlling shareholder, is in Israel this week to meet with creditors about injecting more capital into the business. Clal shares ended 1.8% up at 43.25 shekels. (Michael Rochvarger and Assa Sasson)

TowerJazz rejects suit over accounting methods

TowerJazz said Monday a potential class action suit filed against the company was based on faulty information supplied by a “self-styled analyst with false and misleading information about the company’s strategy, business model and financials.” The suit, which was filed by a single investor who is asking it to be designated a class action suit, comes a week-and-a-half after a company called Spruce Point Capital Management published a review of TowerJazz in which it accused it of touting a joint venture with Panasonic to inflate its stock and enable to convert to equity. Spruce Point also accused Tower of other accounting maneuvers designed to give the appearance of strong gross margins, profitability and free cash flow. But TowerJazz CEO Russell Ellwanger said the company’s accounting is in accordance with standards. “The conclusion is that the [Spruce] report is deceptive, demonstrative of a broad lack of understanding of generally accepted accounting principles and of our strategy and business model,” he said. TowerJazz shares ended down 1.7% to 48.02 shekels ($12.10). (Omri Zerachovitz)

Telecoms shares lead Tel Aviv lower

Tel Aviv shares sunk slowly and steadily on Monday, with telecoms shares taking the led lower. The benchmark TA-25 index ended down 0.75% at 1,452.93 points, while the TA-100 shed 0.65% to a 1,250.50 finish, in light turnover of less than 1.1 billion shekels ($280 million). Israel Chemicals finished 3.3% lower at 15.52 shekels with telecoms shares not far behind: Bezeq dropped 2.7% to 8.20 shekels, Cellcom Israel by 1.25% to 24.49 and Partner Communications by 1.1% to 16.83. IBD Development shares plunged 12.5% to close at 1.13 shekels after it said it would seek to raise 500 million shekels in a share offering by the end of next month at a steep discount of 74 agorot a share. Mannkind led gainers on the TA-100, rising 4.8% to 3.31. (Shelly Appelberg)