March 23, 2020 / 3:48 PM / 9 days ago

UPDATE 1-Israel's Delek cut to 'junk' in latest blow to bonds, shares

(Recasts, updates with credit rating cut, stock/bond price slide)

TEL AVIV, March 23 (Reuters) - Delek Group’s credit rating was cut to “junk” on Monday, piling pressure on its shares and bonds after the Israeli energy conglomerate postponed fourth quarter results.

In a regulatory filing in Tel Aviv, Delek said that it was holding talks with various banks to make changes to its loan agreements to prevent them from calling for immediate repayment.

Hit hard by the steep drop in energy prices, Delek said it would delay reporting quarterly results to no later than April 30 after Israel’s market regulator granted companies an extension from their usual end of March deadline.

Midroog, an Israeli affiliate of Moody’s, cut the rating of several Delek bonds by 14 notches to “Ca”, below investment grade, from “A2”, citing a high probability Delek will not be able to repay them.

Delek, one of Israel’s largest business groups, said in a statement that Midroog’s move was “irresponsible and unprofessional” in light of current market conditions.

The price of bonds issues by Delek were down as much as 53% while its shares closed 41% lower, bringing losses so far in 2020 to more than 85%.

Delek and its subsidiary Delek Energy have outstanding loans of 923 million shekels ($251 million) which are guaranteed by shares in Delek Drilling and Cohen Development that are worth 1.7 billion shekels.

Last week, Delek won a temporary injunction against a foreign bank seeking to sell shares in Delek units to cover a loan payment.

Its foreign subsidiary DKL Energy, which holds Ithaca Energy , has a $200 million loan from a foreign bank.

Delek has 110 million shekels in cash and securities worth 150 million shekels that can be sold in a short time. It expects to receive 164 million shekels from the sale of its share in desalination firm IDE. ($1 = 3.6726 shekels) (Reporting by Tova Cohen, Steven Scheer and Ari Rabinovitch; Editing by Alexander Smith)

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