S&P Maalot has lowered its rating on Israel Corp. (TASE: ILCO) debt, cutting it to "AA-", with a "Negative" outlook, from "AA", with credit watch "Negative".
S&P Maalot analysts say the reason for the downgrade is Israel Corp.'s reliance on operational results of Israel Chemicals Ltd. (TASE: ICL), a reliance which is expected to increase in light of "negative free cash flows" at another Israel Corp. unit, Oil Refineries Ltd. (TASE:ORL), as a result of its investment plan. The downgrade is also based on extended weakness at shipping unit Zim Integrated Shipping Services Ltd..
The analysts do note that as far as Israel Chemicals is concerned, "Despite our forecast for weaker results compared with 2008, due to the trend of lower prices and demand for potash and phosphates, together with reduced demand for bromine products, we believe that the long term trends in the potash market remain positive and that Israel Chemicals' financial results will still be good, historically speaking."
Shares in Israel Chemicals fell 3.49% in morning trading on the Tel Aviv Stock Exchange (TASE), and shares in Israel Corp fell 4.9%. Israel Corp shares have risen 49% in 2009.
Published by Globes [online], Israel business news - www.globes-online.com - on February 12, 2009
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