The municipality will reportedly raise NIS 100-150 million.
In the wake of the recent successful municipal bond offerings, more municipalities are considering them. Sources inform ''Globes'' that the Hadera municipality is considering raising money on the capital market. The municipality has not yet decided on the size of the offering, but it is believe that it will raise NIS 100-150 million. The sources added that Maalot - The Israel Rating Company Ltd. rated the bonds AA-.
This is a high rating, which means that the Hadera municipality will be able to raise money at a fairly low interest rate. The municipality won the high rating because it receives NIS 54 million a year in local property taxes from Israel Electric Corporation (IEC). The municipality plans to use its local property tax receipts as a lien for the bond issue, because tax receipts from the AAA-rated IEC greatly reduce the risk to the lenders.
As mentioned, Hadera’s city leaders have not yet decided whether to hold the bond issue, because Israeli banks grant the municipality low-interest loans. Since the trend of municipal bond issues on the Tel Aviv Stock Exchange (TASE) began, the banks realized that they were facing real competition in lending money to municipalities, and have been forced to improve loan terms to them, including cutting the interest rate to many municipalities.
Published by Globes [online], Israel business news - www.globes.co.il - on September 7, 2006
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