Following the only partly successful bond issues by Bank Hapoalim (LSE:BKHD; TASE:POLI) and Bank Leumi (TASE:LUMI), Mercantile Discount Bank today held a NIS 50 million issue. Sources inform “Globes” that Bank Hapoalim raised only NIS 113 million of a planned NIS 300 million, and Bank Leumi raised NIS 360 million out of a planned NIS 400 million.
Mercantile Discount Bank, of the Israel Discount Bank (TASE: DSCT ) group, planned to raise capital from institutional investors through capital notes that would be included in the bank’s secondary capital. The capital is intended for the bank’s current operations.
Mercantile Discount Bank had a capital adequacy ratio of 10% as of December 31, 2002, above the Bank of Israel mandated 9% minimum. Despite the relatively high ratio, the bank decided to raise capital for the first time in a long while.
Discount Capital Markets, also a Discount Bank subsidiary, handled the round. Mercantile Discount Bank will issue deferred notes, which Maalot The Israel Rating Company rated at AA-. Two instruments will be offered: nine-year, CPI-linked notes, bearing 7% interest; and seven-year, dollar notes, bearing LIBOR plus 1.8% interest.
Sources at Discount Capital Markets today said there was heavy demand for the notes, which were oversubscribed by NIS 100 million by afternoon.
Mercantile Discount Bank has the right to increase the issue, but has not yet made a decision on the matter.
Published by Globes [online] - www.globes.co.il - on March 12, 2003