Determinations Committee rules against Casino credit event
The EMEA Credit Derivatives Determinations Committee has ruled that no credit event has taken place following Casino Guichard-Perrachon's failure to meet a payment on a bond, dashing investor hopes for a payout on credit insurance linked to the debt-laden retailer.
On August 18, Moody's said that the French supermarket had failed to make a coupon payment on its €400m senior unsecured notes due January 2026 within a 30-day grace period.
The rating agency updated Casino's probability of default rating to reflect the payment failure, appending a limited default designation on the company.
Moody's statement, together with an announcement from Casino on June 21 regarding a standstill on interest payments, sparked a question to the Determinations Committee – a group of banks and investment funds that make decisions on proceedings in the US$10trn credit default swap market – whether Casino's failure to pay had resulted in a credit event taking place, and thus whether payouts had been triggered on Casino's CDS.
However, the DC cited three reasons behind its ruling on Tuesday that no credit event has taken place. In a statement on its website, the DC stated that Moody's "is not one of the designated types of information capable of satisfying" its requirements. It also said Casino's announcement was "too preliminary in nature to satisfy such requirements" and that there were insufficient public sources submitted.
"Therefore, the EMEA DC concluded that it had not received publicly available information that satisfies the requirements...of the DC rules for a credit event with respect" to Casino.
In June, the DC ruled that a bankruptcy credit event had not occurred in relation to Casino in an earlier question that was submitted.
Casino is restructuring its capital structure through a conciliation process with its creditors.