Industrial Buildings Bonds Rebound After Drop Ahead of Offering

Bonds of Industrial Buildings Corp. (IBLD), owned by Israel’s second-largest property company, rebounded after dropping the most since April before Israel’s second-largest property company sells debt.

The real-estate company’s 5.05 percent bonds due December 2017 notes, which fell as much as 2.2 percent, rose 0.3 percent the close in Tel Aviv. The yield on the securities fell 11 basis points, or 0.11 percentage point, to 1.96 percent, the lowest since Oct. 6. The company’s shares advanced 0.3 percent to 6.393 shekels.

Industrial Buildings, owned by Jerusalem Economy Ltd. (ECJM), seeks to raise as much as 250 million shekels, according to a statement by Standard & Poor’s Maalot today. Maalot reaffirmed the debt at ilA, the sixth-highest investment grade. The company said in a separate statement today it is considering filing a shelf offering in the coming days. Industrial Buildings in July raised 191 million shekels via a bond sale.

“Investors are selling some of the company’s debt in expectations to buy at reduced prices at the upcoming sale,” Adar Etzioni, head of research at Migdal Capital Markets Ltd. in Tel Aviv, said by phone today. “Real-estate companies, including Industrial Buildings, are continuing to come to the market to refinance debt at lower costs by taking advantage of the low interest-rate environment.”

The Bank of Israel last month unexpectedly cut interest rates by a quarter of a percentage point 1 percent, the lowest in almost four years, to spur economic growth.

Gazit-Globe Ltd. (GZT), Israel’s largest real estate company, is also preparing a debt sale. The institutional tender for the issuance is scheduled for tomorrow, according to an e-mailed statement today by Leader Underwriters (1993) Ltd. S&P on Oct. 10 rated as much as 300 million shekels in debt the company plans to raise with an ilAA-, the fourth-highest investment grade.

Africa Israel Residences Ltd. (AFRE), another property development company, said today it plans to offer as much as 120 million shekels of debt.

To contact the reporter on this story: Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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