Mekorot completes raising of NIS 1.2 billion in debt offering

 Mekorot CEO Amit Lang  (photo credit: Eyal Fisher)
Mekorot CEO Amit Lang
(photo credit: Eyal Fisher)

Mekorot, Israel's national water company, completed the institutional phase of raising new debt in the amount of NIS 1.2 billion on Monday evening. The raising was carried out by expanding two existing series of bonds: Series 10 (NIS / CPI-linked, CPI approximately 3.7 years) and Series 11 (NIS / CPI-linked, CPI approximately 13.75 years). In Series 10, the company raised NIS 420 million with a negative yield to maturity of 0.32% and a spread of 1.19% over government bonds. In Series 11, the company raised NIS 762 million at a CPI-linked yield of 1.76 %% at a spread of 1.55% over indexed government bonds.

The bonds were rated AAA by S&P with a stable horizon. The move was made on the basis of the shelf prospectus published by the company in May 2019, when the leaders of the move were Discount Underwriting and Poalim IBI, when the demand received in the tender reached NIS 2.3 billion.

Mekorot has been ranked at the maximum credit rating of ilAAA for 19 consecutive years. Until 2018, the company's investments in the water economy had reached only NIS 800 million a year, and with the signing of the reform in 2019, the investment plan was increased to NIS 1.5 billion a year. The company will complete the debt raising after the public phase that will take place today. According to Ronit Zalman-Malach, company CFO, "Mekorot has received the investors' trust in challenging market conditions. Mekorot's bonds are a significant anchor for investment managers, including the public's long-term savings."

Amit Lang, the incoming CEO of Mekorot, noted that "the debt raising is another step in the implementation of the government decision regarding the reform of the company. Mekorot has a three-year development plan with projects to be carried out with a minimum annual volume of NIS 1.5 billion, so that the funds raised will allow the company to continue the momentum of developing the water sector, including supplies to neighboring countries."

Yitzhak Aharonovich, Chairman of the Company's Board of Directors, concluded that "the successful IPO is expected to help Mekorot meet the goals of the development of the water sector while maintaining the company's strength and financial robustness. We thank the investors for their great trust and are preparing to expand the water infrastructure throughout the country."