ISDA to Rule on Whether Abengoa in Failure-to-Pay Credit Event

The International Swaps & Derivatives Association said it would rule on whether Abengoa SA caused a failure-to-pay credit event that would trigger payouts on $676 million of default protection.

ISDA said its Determinations Committee was asked for the ruling after the Spanish renewable energy provider failed to pay the equivalent of 13.7 million euros ($15 million) of commercial paper. Abengoa said it didn’t make payments on six notes denominated in euros and dollars issued under its 750 million-euro commercial paper program, according to a statement on the Irish Stock Exchange.

The company is due to pay 5.5 million euros of short-term securities on Thursday and 1 million euros on Dec. 15, according to the exchange’s website.

Abengoa, which has 8.9 billion euros of gross debt, filed for preliminary creditor protection last month. While the company has as long as four months to reach an agreement with creditors under Spanish bankruptcy law, failure to obtain funding may force it into insolvency proceedings before then.

ISDA ruled this week that the filing constitutes a bankruptcy credit event for some credit-default swaps. There were 2,467 trades covering a net $676 million of Abengoa’s debt outstanding as of Dec. 4, according to the Depository Trust & Clearing Corp.

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