Oil Refineries Ltd. dropped to the lowest level in almost five years after Standard & Poor’s Maalot cut its credit rating, citing poor operational performance.
The shares dropped 9.4 percent to 0.915 shekel, the lowest close since December 2008 in Tel Aviv. Trading volume was almost quadruple the stock’s three-month daily average, data compiled by Bloomberg show. The benchmark TA-25 Index rose 0.6 percent to the highest level since April 2011.
S&P lowered the rating to IlBBB- from IlBBB+ while putting it on CreditWatch, it said in a report released after markets closed yesterday. Oil Refineries is the worst performer on Israel’s benchmark TA-25 Index this year, plummeting 51 percent, after posting losses in each of the past eight quarters. The company has slumped 34 percent since a report in Calcalist on Oct. 3 that said bondholders will request a cash injection from majority-owner Israel Corp. to meet imminent debt obligations.
“The company’s operational performance is adversely affected by the low refining margins,” Matan Benjamin, the chief credit analyst at S&P Maalot, said in the emailed report. “The sharp drop in share prices and reduced accessibility to financing sources force it to act immediately to strengthen its liquidity profile, improve cash flow and find alternative financing sources.”
Oil Refineries is scheduled to repay $165 million of debt in the second half and about $330 million next year, S&P said in its report.
Israel Corp., which has a 37.08 percent stake in Oil Refineries, declined 2.2 percent to 1,819 shekels.
BP Plc’s refining market margin, a benchmark indicator for global processing profits, slumped 30 percent to $13.60 a barrel in the third quarter, according to the BP’s website.