Edited by: TJVNews.com
It appears that some new rules are in effect that pertain to real estate companies in the United States that have in the past borrowed billions of dollars in the Israeli bond market.
According to a report in the Wall Street Journal, the new regulations that would tighten things up were proposed by the Israel Securities Authority. The WSJ report indicated that “the rules would change how bonds issued by many foreign companies are rated in a way that would discourage Israeli mutual funds, a dominant market player, from buying them, according to market participants.”
Apparently, what sparked the proposed revisions in the ISA policy were defaults on loans by high-profile bond issuers. The WSJ reported that one example would be All Year Holdings Ltd, a Brooklyn property owner that is one of the largest US issuers of Israeli bonds. They were delisted from the Tel Aviv Stock Exchange because they suffered big losses. Earlier this month All Year was the subject of an investigation by the authorities.
Analysts have indicated that over the last 10 years or thereabouts, about 30 real estate companies based in the United States have raised more than $5.5 billion in the Israeli bond market. The WSJ reported that privately-owned real estate companies based in the United States have used the Israeli market the most despite the fact that it has been open since 2008 to all foreign issuers. What appeals to the US-based real estate firms is that they have the ability to borrow from the Israeli market at lower interest rates than in the United States
The WSJ reported that “most private real-estate firms aren’t able to borrow in the U.S. bond market on the corporate level, although they are able to sell bonds backed by specific properties.”
Among those US based bond issuers are such prestigious companies as Silverstein Properties Inc., the developer of the World Trade Center; Related Cos., the developer of Hudson Yards in New York City; and Extell Development Co., a developer of ultraluxury condominium skyscrapers, according to the WSJ report.
The WSJ reported that Extell is currently marketing a new issue of about 150 million shekels, according to market participants. Also, Kushner Cos., the company controlled by the family of former Trump administration aide Jared Kushner, has been exploring issuing bonds in Israel. If the regulations become final, both companies would likely have to pay a higher interest rate if they proceed with the deals, they say.
