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IDB Holding Drops to Week Low as S&P Cuts Rating: Tel Aviv Mover

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May 14 (Bloomberg) -- IDB Holding Corp. declined to the lowest in a week after Standard & Poor’s Maalot downgraded the Israeli holding company due to “weak” liquidity.

The shares dropped 0.9 percent to 23.30 shekels at the close in Tel Aviv. They fell as much as 6 percent earlier. The yield on IDB’s 5.1 percent shekel-denominated notes maturing in December 2020 rose 133 basis points, or 1.33 percentage points, to a record 29.06 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., Clal Industries & Investments Ltd. and Koor Industries Ltd., 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.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

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

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