Isolux Debt-Swap Sellers to Pay $69 Million to Settle Contracts

Sellers of credit-default swaps on Grupo Isolux Corsan SA bonds will have to pay as much as $69 million to settle contracts linked to the Spanish engineering and power company’s debt.

Traders set a final valuation of 15.75 percent of face value for Isolux notes under a process administered by Markit Group Ltd. and Creditex Group Inc. Sellers of protection on the debt will pay buyers face value in exchange for the underlying securities or the cash equivalent set at the auction. There were 359 default-swap contracts covering a net $82 million of Isolux debt as of Aug. 19, based on data from Depository Trust & Clearing Corp.

The swaps were triggered by a so-called bankruptcy credit event after Isolux ran into financial trouble following rapid overseas expansion. The Madrid-based company last month won creditor agreement for a 2 billion-euro ($2.25 billion) debt-restructuring deal, which still needs court approval.

“There is a concrete plan from creditors to take Isolux forward,” said Jayanth Kandalam, a senior credit analyst at Lucror Analytics in Singapore. “The swaps value is close to the true post-restructuring recovery level on the bonds.”

Isolux’s 850 million euros of 6.625 percent bonds due in April 2021 are quoted at about 17 cents on the euro, according to data compiled by Bloomberg.

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