NYC-based real estate firms face downgrades on Israeli bond market
Recent downgrades lead to increased interest rates, which – alongside the dollar's continued weakness against the shekel – has led to greater debt obligation.
By JERUSALEM POST STAFFReal estate market(photo credit: Courtesy)
New York-based real estate developers trading on the Israeli bond market are facing potential credit rating downgrades due to the impact of the economic crisis sparked by the coronavirus pandemic, New York real estate news site The Real Deal reported Tuesday.Due to the economic crisis, the real estate market has faced several challenges, and recent downgrades will lead to their bonds having increased interest rates. According to The Real Deal, this – alongside the dollar's continued weakness against the shekel – has led to greater debt obligations for these firms.Among the latest firms facing the credit rating drop was All Year Management, which rating agency Midroog on Sunday gave a two-step downgrade on all of its four bond series. According to The Real Deal, citing a filing at the Tel Aviv Stock Exchange, All Year's Series B and D bonds, which were unsecured, were downgraded to Baa2 from their previous A3 ratings. Its Series C and E bonds, which were secured, went to Baa1 from A2.In Midroog's report of the downgrade, they explained that All Year is close to violating some of the financial covenants associated with its bonds. Another reason for this negative outlook is the hiccups and delays it faced in its anticipated $300 million multifamily portfolio sale. This delay was found to be due to All Year's disclosing last week that the planned buyer had not paid the remainder of the deposit by the deadline.However, All Year Management is not the only real estate firm based out of New York City to face downgrades on the Israeli bond market. Back in March, rating agency Maalot downgraded the Israeli bonds of real estate firm Related Companies from A+ to BBB. A few months later, they was upgraded to A after it received bondholder approval to restructure debt, but this is still below its position before the pandemic began, the real estate news site reported.Other real estate firms that faced downgrades in March according to The Real Deal include Extell Development and Moinian, with the former being downgraded from A3 to Baa1 because of an expected slide in condo prices and sales pace, and the latter being downgraded from A1 to A3 due to being unable to cover debt service requirement.
