ISDA to Rule Whether Abengoa Credit-Default Swaps Triggered

  • Committee to assess if Abengoa is in bankruptcy credit event
  • Meeting to take place at 12 p.m. London time on Monday

The International Swaps & Derivatives Association said its determinations committee will rule on whether credit-default swaps linked to Abengoa SA have been triggered by a bankruptcy credit event.

The committee will meet on Monday Nov. 30 at 12 p.m. London time, with a decision that an event has occurred leading to payouts on all contracts, according to ISDA’s rules. A total of 2,814 contracts insuring a net $718 million of Abengoa debt were outstanding as of Nov. 20, according to Depository Trust & Clearing Corp.

The question posed to the committee is the second this week after the Spanish renewable energy company announced it was filing for preliminary creditor protection. The 15 members of the ISDA committee ruled unanimously that no credit event happened on Thursday because Abengoa hadn’t filed for creditor protection at that point. It didn’t discuss whether a filing would trigger the swaps, according to the decision.

Abengoa said on Friday it had formally applied to a court in Seville for protection.

Under Spanish bankruptcy law, the company may now suspend payments and keep negotiating with lenders for a maximum of four months. If Abengoa hasn’t reached a deal by the end of March, it will have to file for full-blown creditor protection. In Spain, more than 90 percent of companies that reach that stage end in liquidation, according to ratings company Axesor.

Abengoa missed interest payments to noteholders in Mexico, financial advisory Monex Casa de Bolsa SA said in two regulatory filings. Abengoa de Mexico SA investors were due 1.16 million pesos ($70,000) on Thursday, according to Monex, which represent holders of the notes.

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