Midroog puts Israel's 012 Smile bonds on watch list

JERUSALEM, Oct 27 (Reuters) - Ratings agency Midroog said on Tuesday it placed the bonds of Israeli telecoms firm 012 Smile Communications (SMLC.TA) on its watch list following 012 Smile's deal to buy control of Bezeq Israel Telecom (BEZQ.TA).

The controlling shareholders of Bezeq, Israel's largest telecoms company, agreed on Sunday to sell their 30.6 percent stake to 012 Smile (SMLC.O) for 6.5 billion shekels ($1.75 billion). [ID:nLP676587].

The deal, which needs regulatory approvals, will be financed from independent sources and by raising debt.

Midroog, Israeli subsidiary of Moody's Investors Service, said in a report it would examine the impact the deal and its financing would have on the business and financial structure of 012 Smile and its parent company, Internet Gold (IGLD.O) (IGLD.TA), and the ramifications for the companies' bond ratings.

012 Smile is 75.3 percent owned by Internet Gold, which is 70 percent held by Eurocom Communications.

Midroog rates 012 Smile and Internet Gold as "A1" with stable outlooks. It rates Bezeq "Aa1" with a stable outlook.

The price of 012 Smile's bonds traded on the Tel Aviv Stock Exchange ILSMLC1=TA were down 0.1 percent at midday, while Internet Gold's bonds ILIGLD2=TA were also down 0.1 percent.

($1 = 3.71 shekels)

(Reporting by Steven Scheer; Editing by David Cowell)