Elbit Imaging Drops After Moody’s Cuts Bonds Five Levels to Junk

Elbit Imaging Ltd. bonds tumbled for a fourth day after Moody’s Midroog cut the credit rating of the Israeli real estate and medical investments holding company five levels to junk. The benchmak government bonds were little changed.

The yield on Elbit Imaging’s 5 percent bonds due April 2020 gained 12 basis points, or 0.12 percentage point, to 49.41 percent at 2:42 p.m. in Tel Aviv, the highest since Dec. 31. The company faces more than 600 million shekels in debt payments this year and has reserves of about 80 million shekels, Moody’s said, lowering the rating for all of the company’s series A through Series G notes and series 1 notes to B2. The shares dropped 3.3 percent to 6.61 shekels.

“The ratings cut is based on the continued fast deterioration of liquidity, without the creation of sufficient sources to face in the long term the weight of repayments,” Moody’s said after the market closed yesterday. “In the light of this and in light of an absence of access to capital markets, the company faces a significant challenge to meet its liquidity needs in the coming year.”

Elbit Imaging expects to receive more than 200 million shekels in 2013 from the sale of assets in the U.S., London and Holland, Moody’s said. The bonds were downgraded by Standard & Poor’s Maalot to ilB/Negative from ilBBB/Negative in December.

The yield on the 5.5 percent Mimshal Shiklit government notes due in January 2022 fell 3 basis points, or 0.03 percentage point, to 3.81 percent.The shekel advanced for a second day, gaining 0.2 percent to 3.7636 per dollar, which weakened against 23 out of 31 expanded major currencies tracked by Bloomberg.

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