Midroog Downgrades Discount Inv bonds,Assigns Negative Outlook

Midroog, the Israeli unit of Moody's Investor Services, has downgraded Discount Investment Corp. Ltd.'s (DISI.TV) bonds to A1 from Aa3 and assigned a negative outlook, the Israeli holding company said Monday.

The downgrade and negative outlook mainly stem from the company's increased debt levels due to a drop in the value of its holdings and to a less favorable business environment for some of its subsidiaries, Midroog said.

It said its main concern was the decline in value of Discount subsidiary Koor Industries Ltd.'s (KOR.TV) holdings in Credit Suissse (CS.NYSE). Discount owns 63% of Koor and recently loaned it ILS500 million ($135 million) to help it lower its debt ratio on guarantees to banks who loaned it money to make investments in Credit Suisse.

In August, Midroog downgraded Discount's bonds to Aa3 from Aa2 due to the same concerns.

At 0858GMT, shares of Discount were up ILS 0.07, or 0.24% at ILS29.37, and shares of Koor were up ILS 0.07, or 0.20%, at ILS 34.66, in a lower Tel Aviv market.

-By Sara Toth Stub, Contributing to Dow Jones Newswires, [e-mail]