Novo Banco Bond Investors Said to Hire Clifford Chance, PLMJ

  • Pimco, BlackRock said to be among group working with law firms
  • Bank of Portugal transfered $2.2 billion of bonds to bad bank

Novo Banco SA bond investors have hired law firms Clifford Chance and PLMJ after Bank of Portugal intervention left them facing potential losses, according to two people familiar with the situation.

Pacific Investment Management Co. and BlackRock Inc., the biggest holders of bonds affected by the central bank’s move, are among the group, said the people, who asked not to be identified because the matter is private. The investors are seeking to attract more bondholders facing losses, the people said.

The group hired the two law firms in response to the central bank’s transfer of five senior bonds from Novo Banco last month to a bad bank. The shift, which helped recapitalize Novo Banco, means bondholders have little chance of getting repaid on notes with a face value of about 2 billion euros ($2.2 billion).

Spokesmen for Lisbon-based PLMJ, London-based Clifford Chance, BlackRock and Pimco declined to comment on the appointments.

The transferred notes tumbled to about 10 cents on the euro from more than 90 cents following the Bank of Portugal’s Dec. 29 announcement. The bonds have since rebound to around 35 cents helped by a Jornal de Negocios report that investors may get some compensation from a bank-industry fund.

Novo Banco emerged from the August 2014 collapse of Banco Espirito Santo SA, once Portugal’s largest lender by market value. It was set up as a so-called good bank, under the supervision of the Bank of Portugal, and it received the senior liabilities and most of the assets from the failed lender.

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