Israel Corp. (ILCO) headed for the biggest decline in a month on concern its oil refining unit will need a cash injection and as HSBC Bank Plc cut the rating of the holding company controlled by Israeli billionaire Idan Ofer.
The stock fell 3.7 percent, set for the biggest drop since Aug. 27, to 1,866 shekels at 1:10 p.m. in Tel Aviv. Shares of Oil Refineries Ltd. (ORL), in which Israel Corp. has a 37.8 percent stake, have plunged 28 percent in four days and bond yields soared to a record after Calcalist reported last week that holders of debt from the loss-making refiner will request an injection of funds from Israel Corp. so it can meet imminent debt obligations.
“There are concerns about a debt settlement at Oil Refineries,” Noam Pincu, an analyst at Psagot Investment House Ltd., said today by phone from Tel Aviv. “Investors fear the company may have to inject funds into the unit.”
Israel Corp. is the third-worst performing stock on the benchmark TA-25 Index (TA-25) this year, pulled down by the performance of its units, which also include fertilizer and potash maker Israel Chemicals Ltd. (ICL) The refiner’s 50 percent drop this year and the chemicals company’s 34 percent decline position them as the worst and second-worst performing shares, respectively, on the index in the period.
Israel Chemicals shares have plunged this year after Potash Corp. of Saskatchewan Inc. scrapped a proposed takeover in April and as OAO Uralkali said July 30 it would end the Belarusian joint venture, raising concern prices for the fertilizer will fall.
HSBC Global Research today cut its rating for Israel Corp. to the equivalent of hold from buy and lowered its price target to 2,010 shekels from 3,500 shekels as turmoil in the potash industry reduces the value of Israel Chemicals, analyst Yonah Weisz wrote in an e-mailed report.
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