Oil Refineries Bonds Rise With Shares on Margins: Tel Aviv Mover

Oil Refineries Ltd.’s 2015 bonds rose the most in almost five years and its shares rallied as the debt-strapped company said refining margins were higher than the benchmark in the third quarter.

The yield on Oil Refineries’ 562 million shekels of 4.6 percent bonds due June 2015 slumped 218 basis points, or 2.18 percentage points, to 10.85 percent at the close in Tel Aviv. The shares soared 7.7 percent, the biggest increase since Oct. 2009, to 1.06 shekels. The stock gained the most on the benchmark TA-25 Index, which added 0.3 percent.

Oil Refineries bonds rebounded from the biggest four-day loss since November 2008 after it said in a statement that its refining margin will be $4 per barrel higher than the $1 average benchmark margin and that polymer margins continued to strengthen in the three months through Sept. 30. Debt holders will request an injection of funds from majority owner Israel Corp. to meet debt obligations, Calcalist reported last week.

“The margin report lifted pressure from the panic sale in recent days,” Shai Shemesh, head of mutual funds at Ramat Gan-based Hadas-Arazim, who manages 1.05 billion shekels ($294 million), including about 6 million shekels in bonds, said by phone. Oil Refineries may need “debt restructuring, which could buy the company more time to recover. Some investors are seeing this as a buying opportunity of the company’s debt.”

The refiner has posted losses in each of the past eight quarters, according to data compiled by Bloomberg. The stock has tumbled 39 percent over the past 12 months, compared with a gain of 6.8 percent for the TA-25 Index.

Standard & Poor’s Maalot in June gave the company a negative outlook and a rating of ilBBB+, citing “less than adequate” liquidity and “very high” leverage levels. Oil Refineries, which has a total of $2.4 billion in debt, will need to pay back $295 million in debt in 2014, according to S&P.

Before it's here, it's on the Bloomberg Terminal.