Bond Issues Set to Reach Four-year High as Interest Rates Touch Historic Low

The Ticker: Ormat in talks to build $150 million Caribbean power plant; Mirland tries to assure bondholders.

Dreamstime

Bond issues set to reach four-year high as interest rates touch historic low

This year is shaping up to be best for new bond issues since 2010 thanks to record low interest rates, the underwriter Rosario Capital said in a report released this week. With just over a week to go till the end of 2014, companies have raised 41 billion shekels ($10.5 billion) in public and private securities offerings, a 5% increase over last year and 8% more than in 2012, the report said. All but 4 billion shekels of that, however, were bond issues. Shai Nevo, deputy CEO at Leumi Partners Underwriting, attributed the growth in bond issues to the absence of equity offerings as an alternative for raising capital and to entry of foreign companies into the market. Nevertheless, the initial public offerings segment showed some recovery, with five companies raising 14 billion shekels this year, up from four raising 320 million in 2013. “As long as interest rates are falling and bond prices have reached as high as they can go, interest in equities will increase,” said Rosario’s Noga Knaz. (Eran Azran)

Ormat in talks to build $150 million Caribbean power plant

Ormat Technologies, the maker and operator of geothermal power plants, is in talks to build a facility on the Caribbean island of St. Lucia close to the city of Soufriere at a cost of between $75 million and $150 million. The St. Lucia government has already arranged financing for the plant, whose construction is slated to start next year. It would provide 15 to 30 megawatts of electricity, equal to as much as half the island’s needs. In addition, Ormat is negotiating for a long-term contract with the local power utility, Lucelec, to buy the power to be generated by the prospective plant. At this stage it’s not clear whether Ormat will build the plant for the St. Lucia government or for other owners. Separately, Ormat will be investing $100 million to quadruple the capacity of its Olkaria plant in Kenya to 110 megawatts. Ormat Technologies was down 1.3% at $27.33 early afternoon Monday in New York. (Yoram Gabison)

Mirland tries to assure bondholders

Roman Rozental, CEO of Mirland Development, the property developer reeling from the collapse of the ruble, asked bondholders on Monday to give the company time for the Russian economy to steady itself. “We’re talking about a force majeure event, but we are hoping this will just be another passing chapter in our history and that we’ll emerge stronger,” Rozental told a meeting of bondholders, who were informed last week that a 43.9 million-shekel ($11.2million) due them this month would not be paid on time. He said creditor banks had not given any warning that Mirland, which has a portfolio of real estate properties in Russia, wasn’t meeting their financial criteria. Controlling shareholder Eliezer Fishman did not attend. Shares of Mirland, which trades on London’s AIM, ended down 3.2% at 75 pence ($1.17). (Michael Rochvarger)

Energy shares carry TA-25 index lower

Antitrust Commissioner David Gilo’s surprise policy reversal on Israel’s natural gas monopoly (see story on this page) sent energy shares tumbling on Monday, taking the TA-25 index with it in the final hours of trading. Both the TA-25 and TA-100 indices ended down 0.4% at 1,481.14 and 1,311.40 points, respectively, on turnover of 1.52 billion shekels ($390 million). Apart from energy shares, which carried the TA-Oil and Gas index down 4.8%, the other big loser was Teva Pharmaceuticals, which ended down 2.3% at 224.10 shekels and was the most active share of the day. But technology shares were mostly higher, led by EZchip, which climbed 4.8% to close at 76.96 shekels after reporting that its latest network processor, the 200-Gigabit NP-5, is now in full production. Nice Systems rose 1.6% to a 198.70 close and Opko Health finished ahead 2.7% at 38.14. In the fixed-income market, corporate bond prices recovered, with the Tel-Bond indices rising as much as 0.7%. (Dror Reich)