ISDA’s credit determinations will reconvene on Monday at 12pm GMT for a second round of discussions over whether recent events at Abengoa represent a bankruptcy credit event that would trigger payouts on US$718m notional of credit default swaps.
The decision comes only a day after the 15-strong committee unanimously ruled that a credit event had not been triggered by Abengoa’s filing to the Spanish Securities Market Commission of its intention to seek creditor protection under “Article 5bis” of the Spanish insolvency law.
Since then, however, a second anonymous general interest question has been submitted to ISDA’s committee, this time citing Abengoa’s filing to the Spanish regulator confirming it had received creditor protection after a deal to secure €350m in funding from a white knight investor fell through.
Abengoa is striving to reach an agreement with creditors to avoid a full insolvency process and, under Spanish law, has four months to reach such an agreement. But with a number of debt maturities – including commercial paper – before year-end, the issuer could still be pushed into technical default before a restructuring agreement is put in place.
On Thursday, the energy firm’s Mexican subsidiary Abengoa Mexico missed a Ps2.2m (US$133,000) payment on short-term bonds. The issuer has five days grace before triggering cross-default, according to broking firm Monex Casa de Bolsa, which issued a statement representing debt holders.
The cost of five-year protection on the name surged following the filing and the instruments are bid at 83% upfront, meaning that it costs US$8.3m to insure US$10m notional of debt plus a 500bp running coupon.