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Russian woes send Africa-Israel tumbling

The company’s share price is at a historic low, and yields on its bonds are at junk level.


The share price of Africa-Israel Investments Ltd. (TASE:AFIL), controlled by Lev Leviev, yesterday continued its slide on the Tel Aviv Stock Exchange (TASE), after “The Economist” published an analysis saying that the Russian economy was liable to enter a severe crisis. Following yesterday’s fall, Africa-Israel’s market cap is below NIS 1 billion for the first time since October 2013, and its share price reached a historic low on the day’s sixth highest trading volume.

Africa-Israel is very exposed to the Russian economy, due to the extensive business there of AFI Development plc (LSE:AFID), the Africa-Israel subsidiary responsible for most of the parent company’s activity in Eastern Europe. Africa-Israel’s main property is AFI’s shopping mall in Moscow.

The analysis by “The Economist” cited a number of factors likely to cause a severe crisis in Russia: the continuing decline in oil prices, additional sanctions to be imposed by the West because of the crisis in Ukraine, and the huge debts that Russian companies must repay (an aggregate $500 billion in debt, $130 billion of which must be repaid next year).

The tension in Ukraine began in late February, and Africa-Israel’s share price has since plummeted 42%. It fell again yesterday, and the company’s bonds (Africa Israel Series 26, Africa Israel Series 27, and Africa Israel Series 28) are being traded at a yield of almost 10%, which practically puts them in the junk bond category.

Published by Globes [online], Israel business news – 

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