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Blackstone Unit Wins in No-Lose Codere Trade: Corporate Finance

GSO Capital Partners LP provided a loan to Spanish gaming operator Codere SA in June with terms that gave it a guaranteed return on credit-default swaps, outmaneuvering sellers of the protection.

The unit of Blackstone Group LP structured the loan in a way that would lead to a payout on swaps it held, according to three people with knowledge of the situation who asked not to be identified because the discussions were private. The contracts were triggered on Sept. 18 after Codere delayed an interest payment by two days to comply with the loan terms. GSO held 25 million to 30 million euros of the swaps, meaning it may have made at least 11.4 million euros ($15.6 million), according to one of the people and data compiled by Bloomberg.