Eagle Properties Cancels Tel Aviv Bond Offering Amid Investor Concerns Over Foreign Debt Risks
Recently, investors in the Tel Aviv Stock Exchange have been warned about the risks of investing in debt issued by foreign companies registered in the British Virgin Islands (BVI). This caution follows a series of negative events involving such companies, notably the collapse of the summer camp operator Simad, which has cast a shadow over the entire sector. Luxembourg has also closed its doors to Israeli bond issuances after only one year, further complicating the market.
Earlier this week, American real estate firm Eagle Properties decided to withdraw its planned bond issuance on the Tel Aviv Stock Exchange. The company, which owns a portfolio of about 24 office properties, had published a prospectus in June for a first bond series worth approximately 500 million shekels. Despite completing a roadshow for institutional investors, the Simad scandal disrupted the market environment, leading Eagle Properties to cancel the offering.
The Simad case involved the controlling Shabsales brothers withdrawing around 100 million shekels from the company’s funds, causing its collapse and sparking severe criticism of underwriters, regulators, and institutional investors. A senior market source noted that "market conditions for BVI companies are currently unfavorable," with investor appetite reduced and spreads increased, making bond offerings less attractive and forcing companies to postpone plans.
One likely disappointed party is former Israeli ambassador to the U.S. and deputy foreign minister Danny Ayalon, who had been advising Eagle Properties through Silver Road Capital, a firm he co-founded in 2017 specializing in guiding international companies into the Israeli capital market. Ayalon and the underwriter Eximus Capital, part of Bank Hapoalim’s group, stood to earn advisory fees totaling about 10 million shekels if the deal had closed. Advisory and underwriting fees for BVI companies typically range from 2% to 4% of the issuance, significantly higher than the 0.4% to 1.5% common for Israeli firms.
Despite the current negative sentiment, insiders expect BVI companies to return to raising debt in Israel in the future, but with stricter conditions such as collateral, higher credit ratings, and more thorough due diligence to prevent repeats of incidents like Simad. When market conditions improve, these companies are anticipated to resume bond offerings in the local market.