Codere SA’s decision to delay a bond coupon payment by two days opened the door for holders of $444 million of credit-default swap contracts to ask for settlement.
The Spanish gaming company said Sept. 13 that it will make a payment on its $300 million of 9.25 percent bonds tomorrow, rather than yesterday when it was due. That enables investors to seek a payout on all outstanding credit-default swaps contracts, according to the rules of the International Swaps & Derivatives Association.
“This will likely be a failure-to-pay credit event for the CDS,” Chris Snow, an analyst at CreditSights Inc., wrote in a note to investors.
There are total of 3,192 contracts covering a net $444 million of Codere’s debt, Depository Trust & Clearing Corp. data show. ISDA’s determinations committee hasn’t been asked to make a ruling, according to the industry group’s website.
Five-year swaps signaled a 98.3 percent chance of default as of 9:35 a.m. in London, according to data provider CMA. The company’s 9.25 percent bonds due February 2019 dropped two cents to 49 cents on the euro, and its shares rose 7.63 percent to 1.27 euros, Bloomberg data show.