Exceptional month for debt offers on TASE
In one year, around 100 companies, mostly technology companies, have gone public on the Tel Aviv Stock Exchange, raising more than 13 billion shekels.
The surprisingly lively primary market has overtaken corporate debt raising activity, but this market has also seen a period of intense activity, and the amounts raised are much larger.
Figures from the Midroog rating agency show that the amount of debt raised in July, totaling NIS 11.6 billion, represents a peak not seen in Tel Aviv for eighteen months, and represents 2.5 times the amount of debt raised in July of last year.
Midroog CEO Avi Sternschuss said: “With low interest rates and spreads, the corporate debt market continues to be attractive to a wide range of issuers looking to profit from low yields. and to issue new bonds with fairly long durations. continue to characterize the bond market over the coming months as well. “
The Azrieli group leads
Three particularly large debt offers pushed July’s figure up. The most important was that of the income-producing real estate giant Azrieli Group Ltd. (TASE: AZRG), which raised NIS 3.6 billion, or 30 percent of the monthly total.
After Azrieli Group comes the defense company Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) (NIS 1.9 billion) and Israel Electric Corporation (NIS 1.2 billion), together accounting for a quarter of the total debt raised in the local market last month.
With the intense activity in July, the total amount of debt raised on the Tel Aviv Stock Exchange in the first seven months of 2021 amounted to NIS 35 billion, similar to the figure for the corresponding period in 2020 (34 , 5 billion shekels), and slightly less than the 37 billion shekels raised in the first seven months of 2019.
Weaker financial sector
Thanks to the massive offer from the Azrieli group, the real estate and construction sector accounted for more than half of the debt raised in July (5.6 billion shekels). For the year at the end of July, the amount of debt raised by real estate companies is around 17 billion shekels, or 8% more than for the corresponding period of 2020.
Faced with the dominance of the real estate sector, the financial sector experienced a weak July, raising barely 300 million NIS (of which Direct Finance (TASE: DIFI) was responsible), up from more than 2 billion NIS in July 2020.
Also since the start of the year, this sector has been relatively weak, raising less than NIS 2.5 billion, 70% less than in the first seven months of last year. “The drop in offerings from this sector, which is made up mainly of the big banks, is largely due to the high amounts raised last year,” says Midroog, which means that banks have sufficient cash reserves and don’t don’t need to raise more money at this point. stage.
More unrated offers
Midroog figures also show that “the widening of the credit risk profile among issuers continues, with more offerings and issuers that are unrated”. According to the figures, since the start of 2021, the proportion of issuers rated Aa (excluding financial companies) has fallen to 34%, against 41% over the corresponding period of 2020, and an average of 50% in 2018-2019. This, says Midroog, is due to “improved market access for issuers of medium and lower credit quality.”
Unrated issues represented 12% of the face value of debt issues in the first seven months of the year, up from 2% last year and 7-8% in 2018-2019.
Posted by Globes, Israel business news – en.globes.co.il – on August 3, 2021
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020