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75 cos from TA-100 likely planning to issue bonds

The 2% cut in interest rates makes bonds an attractive way for companies to carry debt

About 75 of the companies trading on the TA-100 index are planning to raise capital mainly through bond offerings following the 2% cut in key lending rates.

The cut has resulted in sharp gains on the Tel Aviv Stock Exchange over the last two weeks, and has revived the bond offerings market.

Jerusalem Economic Corporation and Industrial Building Corporation have already made bond offerings, and it seems that others will follow suit in the coming weeks, granted that the interest rates will not be raised.

Managers of underwriting firms believe that convertible bonds are the best investment instrument especially when the stock market is posting marked gains. One manager said that under such conditions, the possibility of converting bonds into shares seems much more realistic than in the past, which is why these bonds have a real upside.

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Menashe Ram, who heads underwriting and offerings at Israel Discount Capital Markets & Investments, believes that at least 75 companies out of the 100 companies trading on the TA-100 index are these days preparing to raise capital whether through bond or stock offerings. He said that stock offerings could be somewhat premature given the recent gains. Ram said that after the cut in lending rates, raising capital from the banks has become less relevant, which is why companies are these days approaching underwriting firms in order to look into the possibility of raising capital.