Mekorot, Israel’s National Water Company, achieved a significant milestone this week as it successfully completed the institutional phase for negotiable bonds, expanding its Series 11 Bonds.
The company, responsible for managing Israel’s water supply, witnessed an overwhelming demand that reached NIS 1.8 billion, which is three times the initially planned issuance.
Mekorot successfully raised NIS 620 million in this phase, demonstrating robust investor confidence in the company’s financial stability and commitment to the water sector’s development.
“Mekorot has a three-year development plan, with an annual volume of NIS 1.5 billion, so that the funds that will be raised will allow Mekorot to continue the development momentum of the water sector and meet all its challenges, including local and regional water supply to Israel’s neighboring countries,” said Amit Lang, Mekorot’s Chief Executive Officer.
Following the over-demand, the institutional phase was set at a minimum par value of 104 Agorot, reflecting an effective annual indexed yield of 2.6%. This figure represents a margin of 129 points over a government bond at a similar rate. Under the offering, Mekorot offered investors index-linked bonds with an average duration period of 12.3 years, with the principal to be repaid in equal payments (save for the last payment) during 2021-2053. The bonds are rated by the S&P Ma’alot rating company at AAA, with a stable horizon.
Mekorot has been ranked for 20 consecutive years, holding the maximum credit rating of AAA il. Until 2018, the volume of Mekorot’s investments in the water sector totaled only NIS 800 million per year, and with the signing of the reform in 2019, the investment plan was increased to NIS 1.5 billion per year. Mekorot will complete the debt issuance after the public phase that will take place tomorrow (Wednesday). According to Yossi Cohen, Mekorot’s Chief Financial Officer, Mekorot continues its tradition of successful debt issuances for the development of the water sector while continuing to gain the trust of investors through the placement of its bonds as a significant component of investors’ investment portfolios.
Yossi Cohen, Mekorot’s Chief Financial Officer, emphasized the company’s tradition of successful debt issuances and its dedication to advancing the water sector. He noted that this fundraising effort would empower Mekorot to continue its development initiatives, including supplying water to both local and regional areas, even to Israel’s neighboring countries.
“The successful debt issuance is expected to help Mekorot meet its goals of developing the water sector while maintaining its financial strength and soundness,” said Yitzhak Aharonovich, Mekorot’s Board of Directors Chair.
The issuance was carried out under the leadership of Cohen, Chief Legal Counsel Chana Herstik Sichel and Head of Finance Unit Lina Levy Dragotsky, and with the assistance of representatives of the Government Companies Authority. Managers of the offering were Leader Issuance and Underwriting, Poalim I.B.I., Barak Capital Underwriting, and Discount Underwriting, while the legal advisors were Adv. Esther Koren, Adv. Yifat Sheftel and Adv. Shelly Bard, of Gross & Co.
This article was written in cooperation with Mekorot.