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Sunday, 22 October 2017

Abengoa CDS holders file default question to ISDA

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  • ISDA

Holders of credit default swaps referencing Spanish energy company Abengoa have asked ISDA’s Credit Determinations Committee to consider whether a bankruptcy event has occurred that would trigger payouts on US$718m net notional in outstanding protection.

An anonymous general interest question was submitted to ISDA’s DC on Wednesday. The committee has two working days to consider whether it will convene to discuss the question.

The question came after the company confirmed in filing to the Spanish Securities Market Commission that it would file for creditor protection after an agreement with white knight investor, Gonvarri, a division of Basque industrial group Gestamp, broke down (see story).   

The planned €350m investment was seen as crucial to the energy company’s survival as its seeks to reduce its €8.9bn debt load.

Abengoa is striving to reach an agreement with creditors to avoid a full insolvency process and under Spanish law, has four months to reach an agreement with investors. With US$5.3m of commercial paper maturing today and a further €2.25m maturing on December 2, however, it could be pushed into technical default before a restructuring agreement is put in place.

The cost of five year protection on the name surged following the filing and the instruments are now bid at 82% upfront, meaning that it costs US$8.2m to insure US$10m notional of debt plus a 500bp running coupon.

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