Business in Brief: Tel Aviv Follows Wall Street Sharply Lower

IDB Development Corp. bondholders clamor for planned sale of shares; S&P affirms Israel’s credit rating with Stable outlook.

Pedestrians pass the entrance to the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.
Bloomberg

Tel Aviv follows Wall Street sharply lower

Big drops on Wall Street over the weekend translated into a sell-off on the Tel Aviv Stock Exchange yesterday, with dual-listed shares pacing the declines. The TA-25 and TA-100 indexes each declined about 1.2% to end at 1,437.89 points and 1,232.09 points, respectively. Turnover was thin, at less than 533 million shekels ($137.3 million). Among the dual-listed stocks that led the decliners, Nice Systems finished down 3.6% at 224.70 shekels in heavy trading, LivePerson down 4.3% at 20.84, SodaStream off 4.2% to 51.57 and Teva Pharmaceuticals down 2.4% at 228.20. But Opko Health bucked the trend, adding 4.3% to 32.25 as did Mannkind, with 1.1% gain to 3.65. In the fixed-income market, the government’s 10-year shekel bond climbed 0.3% to cut its yield to 1.8%. In foreign-currency trading on Friday, the dollar sank nearly 0.7% to a Bank of Israel Rate of 3.888 while the euro lost 0.5% to 4.3457. (Uri Tomer) 

IDB Development Corp. bondholders clamor for planned sale of shares

IDB Development Corporation bondholders are demanding the holding company go ahead with plans to sell shares despite opposition from minority shareholders of its parent company, IDB Holding Corporation. In a letter sent over the weekend, Guy Gissin, the trustee representing IDB Development bondholders, urged the company to go ahead with the 700-million-shekel ($180.3 million) sale at any price or face the prospect of IDB’s becoming insolvent. IDB Development has virtually no cash on its books and no immediate prospects for raising capital after the sale of its 55% stake in Clal Insurance collapsed to make the repayments. Proceeds from the offering, which will be priced at just 71 agorot per share, would help the holding company meet payments that are due to bondholders by June. But IDB Holdings shareholders are resisting the sale, which would dilute their holdings by 85%, unless they buy into the offering. IDB shares fell 3.2% to 1.07 shekels. (Michael Rochvarger)

S&P affirms Israel’s credit rating with Stable outlook

Standard & Poor’s affirmed Israel’s sovereign credit rating at A+/A-1 for foreign and local currency debt and maintained a Stable outlook. “We expect the Israeli economy to weather potential volatility in the global economy and international financial market, thanks to its diversified economy, strong external position, and flexible monetary framework,” S&P said in a note released on Friday. It said the Israeli economy would grow at an average rate of about 2.5% annually in the 2016 to 2019 period, or 1% on a per capita basis. Israel’s budget deficit was just 2.2% in 2015 and will probably not exceed 3% this year or in the near future despite spending increases and tax cuts, the agency said.  Israel’s rating is weighed down by geopolitical risks. “We do not expect the nuclear deal between Iran and the international community to have a material direct impact on the ratings on Israel, given the continued regional tensions,” S&P said. (TheMarker Staff)

U.S. property company KBS files for Tel Aviv bond issue

The U.S. property developer KBS filed a draft prospectus yesterday to sell $150 million of bonds for trading on the Tel Aviv Stock Exchange and began road show meetings with investors. KBS, one of the largest in a clutch of U.S. property developers to tap the Tel Aviv market in the past three years, owns and manages 514 properties valued at $9.7 billion and has the world’s fifth biggest portfolio of office buildings. Like other overseas developers, KBS will issue its bonds through a special subsidiary under its KBS Strategic Opportunity real estate investment trust. The REIT has 20 buildings across the United States valued at $1.5 billion that it plans to upgrade and increase occupancy. The fund has relatively low leveraging, with debt at between 39% and 57% of assets and a loan-to-value to ratio of 42%. The bond issue is slated for two weeks from now. (Eran Azran)