The Ticker: Bonds Tumbles After Adama IPO Flop, Weaker Outlook for Gov’t Debt

Taldor managers want to keep erroneous bonuses; Osem profit edges up on holiday timing; Isramco reports sharp rise in profit; Israel Electric net slumps in third quarter.

Corporate and government bonds both dropped sharply on Sunday after the agrochemicals company, Adama, postponed its initial public offering and Fitch lowered the outlook for Israeli government debt. The Tel-Bond 20 index ended down just over 1% at 321.10, with Adama series Dalet bonds sliding 5.8% and those of Africa Israel Investments down 7.6%. Meanwhile, the government’s 10-year shekel bond lost 0.09%, raising its yield to 2.15%. The unlinked Galil bond lost 0.19% to bring its yield up to 0.53%. In share trading, the abortive IPO reverberated on IDB Group, which owns a big stake in the agrochemicals company. IDB Development Corporation tumbled 17.25% to close at 2.14 shekels and its Discount Investment Corporation unit dropped 2.4.1% to 9.50. Africa Israel shares dropped 4.4% by close to end at 4.97 shekels. The TA-25 index ended down 0.5% at 1,445.87 and the TA-100 down by 0.6% at 1,285.11. Turnover was a relatively brisk 643 million shekels ($166.6 million) for a Sunday. (Omri Zerachovitz)

Taldor managers want to keep erroneous bonuses

The management at Taldor, a Tel Aviv Stock Exchange-listed company that provides companies with information technology services, doesn’t want to give back the bonuses it was awarded due to financial reports that accidentally overstated the company’s profit by 37 million shekels ($9.6 million) over close to six years. Management reached an agreement with the board that the bonuses would be taken back by deducting them from future bonuses, according to a statement issued by Taldor on Thursday. But CEO Arie Rimini and other managers say they want an arbitrator to rule, saying they shouldn’t be punished for a mistake. Two major shareholders, Psagot Investment House and Yelin Lapidot, are suing management, the board and Taldor’s parent company over the error, which was discovered last March. Shares of Taldor , which reported a 307% jump in third-quarter net profit last week, closed up 5.1% at 6.62 shekels. (Omri Zerachovitz)

Osem profit edges up on holiday timing

Osem Investments, one of Israel’s biggest food makers, said on Sunday its quarterly net profit edged up 0.7% as the timing of the Jewish High Holidays this year boosted sales. Osem, which is 64%-owned by Switzerland’s Nestle, said third-quarter net profit rose to 102 million shekels ($26.5 million) from 101.3 million a year earlier. Quarterly sales rose 4.2% to 1.13 billion shekels as the High holidays this year fell mostly in October, providing consumers with more shopping days ahead of the holidays, Osem said. It also attributed the improved profitability to deeper penetration of Nestle products, an expansion into new activities in Israel and abroad, new products and efficiency measures. Osem shares edged up 0.1% to 70.96 shekels. (Reuters)

Isramco reports sharp rise in profit

Isramco, which owns a 28% stake in the Tamar natural gas field, reported on Sunday a 137% increase from a year ago in third-quarter profit on Sunday to $114 million. The rise was mainly due to top the fact that, for technical reasons, Tamar supplied gas to the customers of the smaller Thetys Sea field for two months, adding $27 million to Isramco’s bottom line. That came on top on higher sales of gas and condensate, which boosted the company’s nine-month profit to $206 million. In the third quarter alone, sales climbed 67% form a year earlier to $170 million. Isramco also benefited from the strengthening of the dollar, which reduced the value of debt it has denominated in shekels. Shares of Isramco fell 2.4% to 77 agorot (20 cents). (Eran Azran)

Israel Electric net slumps in third quarter

State-owned Israel Electric Corporation saw its net profit slump 17% from a year ago in the third to 204 million shekels ($52.9 million) as a relatively mild summer reduced demand for electricity to power air conditioners and competition from private power producers grew. Revenue fell 19% to 6.8 billion shekels, the utility reported. IEC also suffered a 35% jump in financing costs for the three months due to the depreciation of the shekel, which increased the size of its dollar-denominated debt. The utility reduced it to 69.2 billion shekels but it still remains a highly leveraged company with debt equal to about 84% of equity. Yaifta Ron-Tal, IEC;’s chairman, said the government had to push forward with reforming the electricity industry and restructuring the company to stem its financial problems. (Avi Bar-Eli)

Bank IDs in 2016
Israelis will be entitled to a “bank identify card” as of the end of February 2015, under the final version of a directive published by the Bank of Israel yesterday. Sent once a year to bank clients, it will provide all account details in a single document. (Sivan Aizescu)

Chinese flights to Israel
Hainan Airlines will become the first Chinese airline to fly to Israel, the Marker has learned. The move would present the first direct competition for El Al Airlines on the Israel-China route and likely lead to lower prices. (Zohar Blumenkrantz)