The momentum of offerings on the bond market continues. Today was another busy day, with the completion of the public stage of bond offerings by Mizrahi Tefahot Bank (TASE:MZTF), Strauss Group Ltd. (TASE:STRS) and Alrov (Israel) Ltd. (TASE: ALRO) unit Alrov Properties and Lodgings Ltd., after substantial oversubscriptions were recorded at the institutional stage.
The stream of bond offerings by Tel Aviv Stock Exchange companies is growing stronger, and the total of offerings made so far this year (in just three weeks) is already NIS 6 billion. This compares with NIS 32 billion raised in the whole of 2012.
Mizrahi Tefahot Bank is the outstanding player in the bond market in January so far, with an offering of up to NIS 1.7 billion (after raising NIS 1.5 billion in the institutional stage, with high demand for the paper). Israel Aerospace Industries is another standout. It recently completed the raising of NIS 1.2 billion, with high demand registered in that offering too.
Among other large companies: pesticides producer Makhteshim Agan Industries Ltd. has raised NIS 680 million; income-producing real estate company Alony Hetz Property and Investments Ltd. (TASE: ALHE) raised NIS 340 million; and food company Strauss is raising NIS 300 million.
Yields are returning to single-digit levels
"In recent months we have seen large bond offerings, but you have to remember that most of the money comes from companies with high ratings, such as Mizrahi Tefahot, Israel Aerospace, Makhteshim, and Strauss," Leader Underwriters CEO Ranen Cohen-Orgad said today. "Nevertheless," he added, "there are offerings by companies with comparatively low ratings, such as Prashkovsky, Mishorim, Isras, and Albar. One area that has not revived and that we hope will come back this year is IPOs.
"The key to understanding the revival is the companies' yields, which have returned to single-digit levels, and even to the 7-8% region. In many cases they can come to the market, with or without sureties. Looking back, the revival began after the Jewish holiday season, and each month after that there has been a reason supporting fund raising.
"I don't think that we are in for a severe economic recession, and so the economy has to continue running with bank and non-bank credit. Some of the companies cannot obtain credit from the banks, some prefer the capital market, and some are diversifying their sources of credit. All in all, in my view, 2013 will be a better year for raising money than 2012, which was similar to 2011 and not as good as 2010."
Published by Globes [online], Israel business news - www.globes-online.com - on January 21, 2013
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