Moody's downgrades IEC

Moody's Investor Services today downgraded it rating for Israel Electric Corporation (IEC) (TASE: ELEC.B22) bonds by one grade to Baa3, and reiterated its "Negative" outlook. Moody's added that there is a high probability of more downgrades in the future.

Moody's cited IEC's cash flow problems caused by disruptions in natural gas deliveries from Egypt, which forced the utility to buy more expensive diesel at an added cost of several billion shekels. Moody's revealed that IEC had sought a 23% electricity rate hike; the government ultimately raised rates by 15%.

Moody's also mentioned uncertainty about natural gas deliveries in 2012. "The negative outlook reflects the challenges and risks facing the company in the next 12-18 months."

Last week, Midroog Ltd. downgraded its rating for IEC bonds to Aa3 with a "Stable" outlook.

Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2011