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IDB Holding’s 2020 Bonds Gain Most in Week on Clal Stake Talks

Jan. 17 (Bloomberg) -- IDB Holding Corp.’s 2020 bonds rose the most in a week after a unit of the Israeli company, which is struggling to pay debt, offered to negotiate a stake sale in Clal Insurance Enterprises Holdings Ltd. Government bonds fell.

The holding company’s 5.1 percent bonds gained 1.3 percent, the most since Jan. 10, to 22.27 agorot to the shekel at the close in Tel Aviv. IDB Holding shares climbed for the first time in four days, advancing 1.5 percent. The yield on the 4.25 percent government bonds maturing in 2023 increased six basis points, or 0.06 percentage point, to 4.03 percent.

Koor Industries Ltd. received an offer from IDB Development Corp. to start talks to buy a full or partial stake in Clal Insurance, Koor said today. IDB Development owns 55 percent of the insurer and a direct 13 percent stake in Koor, according to data compiled by Bloomberg. IDB Holding has been seeking funds to avoid defaulting on 2 billion shekels ($538 million) of debt after bondholders on Jan. 7 rejected a settlement proposal.

“The deal will provide some liquidity but it is still unclear how the group will be able to manage to repay debt,” said Raz Mor, a corporate debt analyst at DS Securities & Investments Ltd. in Tel Aviv. “Recent attempts to sell assets also shows that the company is struggling to find outside interest for investments.”

Given Imaging Ltd., developer of a capsule-sized camera, this week said it had ended talks to merge or be acquired. IDB Development’s subsidiary Discount Investment Corp. owns 15 percent of Given, data compiled by Bloomberg show.

Asset Sales

The yield on IDB’s 2020 bonds, which soared 47 percentage points last year, fell 0.54 percentage point today to 59.42 percent. IDB has been selling assets, including a stake in Clal Industries & Investments Ltd., as it seeks to avoid a default on its debt.

Standard & Poor’s Maalot cut the rating on IDB Holding’s 2020 bonds to default last month, citing a “large gap” between its available funds and obligations of the company, controlled by Israeli tycoon Nochi Dankner.

The Tel Aviv Bond 40 Index, which measures inflation-linked and fixed-rate corporate bonds, rose for a third day, advancing less than 0.1 percent to 282.20. The shekel appreciated 0.2 percent to 3.7175 a dollar at 4:36 p.m. in Tel Aviv, taking the currency’s advance this month to 0.5 percent.

One-year interest-rate swaps, an indicator of investor expectations for rates over the period, rose two basis points to 1.73 percent.

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

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

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