IDB Holding Corp. Ltd. (IDBH) declined to the lowest on record after Standard & Poor’s Maalot downgraded the Israeli holding company’s ratings due to “weak” liquidity.
The shares dropped 2.6 percent to 22.90 shekels at 12:23 p.m. in Tel Aviv, poised for the lowest close since January 1995 when Bloomberg started tracking the shares. The yield on IDB’s 5.1 percent shekel-denominated notes maturing in December 2020, rose 69 basis points, or 0.69 percentage points, to a record 28.4 percent.
The company’s credit rating was cut three levels to ilBBB-, the lowest investment grade ranking, from ilA-, IDB said yesterday. Standard & Poor’s also lowered IDB Development Corp. to ilBBB+, the third-worst investment grade, from ilA-. The outlook on IDB Holding, IDB Development, Discount Investment Corp. (DISI), Clal Industries & Investments Ltd. (CII) and Koor Industries Ltd. (KOR), is negative.
“There is a credit squeeze,” billionaire Nochi Dankner, who controls Tel Aviv-based IDB Holding, told Army Radio today. “It’s true that it is not easy to recycle debt. That is why we are undertaking other business steps, such as mergers and divestment. One must remember that at other levels in our group there is a lot of money.”
The company said it will consider steps to boost liquidity at its units in coming months, according to a separate statement e-mailed late yesterday. Discount Investment and Koor on May 9 said the acquisition of Koor’s shares by Discount may be completed only in cash.
IDB said it has “already started” buying back bonds under a plan announced on May 10 to repurchase 100 million shekels ($26 million) of debt to trim funding costs.
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