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S&P Maalot may cut Oil Refineries credit ratings

Thu Apr 23, 2009 3:29am EDT

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TEL AVIV, April 23 (Reuters) - Standard & Poor's Maalot said on Thursday it had placed bonds of Israel's Oil Refineries (ORL.TA) on "credit watch negative", citing expectations for continued erosion in the refining industry.

The company's bonds are rated "A".

"Despite the relatively good margins that characterised the first quarter of 2009, S&P estimates the margins in the next 12 months could decline in light of a possible erosion in diesel margins," the ratings agency said in a statement.

It also noted Oil Refineries is in the process of implementing an aggressive $1.1 billion investment plan. Though this will eventually strengthen the company's profitability, financing the plan through debt will substantially increase Oil Refineries' leverage, S&P said.

Oil Refineries, Israel's biggest refinery, is a subsidiary of holding company Israel Corp (ILCO.TA). (Reporting by Tova Cohen; Editing by Dan Lalor)



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