The Maalot rating company has downgraded the credit rating of MKH, a company owned by Gad Zeevi that is building the Grand Kanyon shopping mall in Haifa, from AA to BBB-minus.

The new rating attests that MKH's ability to pay its debt is average compared with other Israeli debt issuers.

The grounds for the two-step downgrade include the doubtful financial soundness of Hamashbir Kazarchan, which is the Kanyon's biggest customer.

Hamashbit and Zara, the Spanish clothing chain, provide 11.7% of MKH's annual revenues.

Maalot says MKH's debt repayment burden is about NIS 41 million a year, which is about the same level as the revenues that the Haifa mall is expected to generate in the coming year. That ratio is not enough to sustain the company's original debt rating.

The Haifa Kanyon is one of Israel's biggest shopping malls. Although it is fully occupied, Maalot notes, the recession coupled with Israel's security situation have weighed on the occupant businesses, leading to delays in making rental payments and requiring temporary credit relief, that rolls over every three months.

These breaks have reduced the mall's rental income to NIS 41 million a year, against Maalot's original estimate of NIS 44 million, the rating agency explained.