Israeli income producing real estate company Azrieli Group Ltd. (TASE: AZRG) is nearing the completion of a NIS 2.2 billion bond issue, one of the largest ever carried out on the local corporate bond market. The company today reported that it had ensured NIS 2 billion in the institutional stage of the offering at a low 1.3% interest rate.
Azrieli initially planned to raise NIS 900 million, but increased the amount when the offering attracted demand on a much larger scale. Azrieli obtained approval for the higher amount from the Midroog credit rating agency, which rated the bonds Aa1 with a stable outlook. Azrieli is expected to use the proceeds to repay debt and continue its currently intensive development activity, including nine development projects with a total of 680,000 sq.m., at an investment of over NIS 5 billion.
Azrieli raised NIS 2 billion in bonds last year, and has reported raising NIS 400 million in private debt so far this year. Azrieli CEO Yuval Bronstein said that the large-scale demand for the bonds "constitutes a vote of confidence in the company's strength and the way the board of directors has outlined its path." Azrieli CFO Irit Sekler-Philisof added, "The current offering will make it possible to cut financing costs still further and extend the average duration of the group's loans."
Azrieli is benefiting from the red-hot activity on the local bond market, and its debt offering is the largest of any company this year (excluding banks). In summarizing the first half of the year, it could be said that intensive capital raising in the local corporate market was continuing, with NIS 31 billion issued.
Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2016
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