Growing negative sentiment on the Tel Aviv Stock Exchange (TASE), the last week of June and beginning of July has led to a drop in demand for offerings by public companies. After a wave of bond offerings in early June suggested the first signs of a recovery, investors' selectivity now dominates current offerings.
Demand has been low for several bond issues, and companies are raising less than they planned. There are now fewer bond issues amounting to hundreds of millions of shekels, and recent issues raised only a few tens of millions of shekels each.
The most prominent example of the negative trend came last week from Elezra Holdings Ltd. (TASE:ALZR.B1) controlled ILD Insurance Co. (TASE: ILDH), which was forced to cancel its bond issue, due to low demand. The company planned to raise NIS 80 million, but received orders for only a quarter of the amount, and it cancelled the offering.
Bond offerings in the past few days by Delek Energy Systems Ltd. (TASE: DEOL) and Afcon Industries Ltd. (TASE: AFIN) also saw low demand.
In contrast, two bond offerings by real estate companies were oversubscribed, though not by much: Ashtrom Properties Ltd. (TASE:ASPR) subsidiary Ashdar Building Co. Ltd. (TASE:ASDR) raised NIS 50 million, and Aspen Group Ltd. (TASE:ASGR) raised NIS 40 million.
Ubank Mutual Funds general manager Kobi Segev said, "Because of withdrawals from mutual funds, the funds have not been buying in recent offerings, and selectivity has returned to the market. It's possible to see quite a few poor offerings have failed. High-rated offerings can succeed, but smaller companies will struggle. To succeed, even good quality companies holding issues will now have to offer better terms, and whoever is liquid can benefit from this."
Published by Globes [online], Israel business news - www.globes-online.com - on July 4, 2010
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