Maalot upgraded Shikun & Binui's bond rating to A+; debt will be significantly reduced
The rating agency Maalot has upgraded the bond rating of Shikun & Binui to A+. This decision comes ahead of a 350 million shekel bond series expansion as part of the company's debt reduction strategy.
The rating agency Maalot has upgraded the bond rating of Shikun & Binui to A+, compared to A in the previous rating. The rating upgrade was carried out ahead of the expansion of series 11 of Shikun & Binui's bonds by 350 million shekels, as part of a debt recycling move.
Analyst Ayelet Matzov noted the company's two recent divestments: the sale of Shikun & Binui Energy to the Generation fund for 4.45 billion shekels, and the sale of 40% of student dormitories in Tel Aviv to Migdal and Tel Aviv University for 85 million shekels. These divestments, especially the energy one, will significantly reduce the solo debt of Shikun & Binui, which is controlled by Nati Saidoff. The company will benefit from a cash flow of 2.8 billion shekels from the energy divestment and 230 million shekels from the dormitory divestment.
"These actions reflect the implementation of Shikun & Binui's strategy to focus on its core activities and reduce leverage."
Maalot analysts, Matzov and Evgeny Silishtian, noted Shikun & Binui's historical lands, recorded at a value of 6.3 billion shekels, which it has improved over the years, lands that are widely geographically dispersed.
"The sharp rise in the value of its holding in Shikun & Binui Energy and the progress in implementing the strategy to focus activity, alongside a financial policy of reducing leverage, improve our assessment of the debt recovery rate and are reflected in the upgrade of the unsecured bond series ratings," the analysts noted.
They state that given a hypothetical default scenario, the debt recovery rate would be between 70% and 90%. A hypothetical default could occur against the backdrop of a deep recession in the various economies where the company operates, according to the analysts, and a significant rise in unemployment and the Bank of Israel interest rate. Shikun & Binui's stock, managed by Amit Birman, fell by 0.7% in today's trading and is trading at a market capitalization of 9.7 billion shekels.
