IDB Development Corp.’s 2018 bonds jumped to a 17-month high after the debt-strapped company said it expects to post a 390 million-shekel ($110 million) profit on the partial sale of its Clal Insurance Enterprise Holdings Ltd. (CLIS) unit.
The yield on IDB Development’s 1.35 billion shekels of 4.5 percent bonds due June 2018 fell 72 basis points, or 0.72 percentage point, to 13.72 percent, at the close in Tel Aviv, the lowest since May 2012. Clal Insurance shares rose 2.2 percent and those of parent IDB Holding Corp. (IDBH) added 0.3 percent to 7.202 shekels, the highest since Aug. 26.
IDB Development, which owns 55 percent of Clal, on August 21 met a court deadline for an accord to sell 32 percent of its insurance unit to Chinese investors for 1.47 billion shekels. The company said today the investors showed they have financial capability for at least $700 million. IDB Holding’s Chairman Nochi Dankner has been trying to sell assets and find investors as the company struggles to meet payments on about 2 billion shekels and is mired in debt-restructuring efforts.
“This is a good advancement and on the outset looks positive for the development of the deal and IDB,” Avihay Hermon, a trader at Israel Discount Bank Ltd. (DSCT) in Tel Aviv, said by phone today. “Still, until the deal is completed nothing is certain and we have seen investors pull out before.”
Earlier in August, an unidentified Thai investor pulled out of an offer to buy a stake in Clal Insurance. The yield on IDB Holding’s 5.1 percent bonds maturing December 2020 dropped for a second day, falling 212 basis points to 49.60 percent.
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