One of Germany’s Most Popular Short Bets Is Getting Even More Crowded

Welcome to The Brink. We are Libby Cherry and Isolde MacDonogh, reporters in Frankfurt, where we’re following an intensifying short attack on Gerresheimer, a German maker of packaging for medicines and cosmetics. But first, Giulia Morpurgo breaks down a rare and potentially precedent-setting ruling on Ardagh credit default swaps. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net.

The Curious Case of Ardagh’s CDS

A rare external ruling in the credit-derivatives market may set an important precedent for how credit default swaps function in today’s increasingly complex restructurings, but it still doesn’t clear a straightforward path to payouts for investors, Giulia Morpurgo writes.

An expert panel has decided that CDS tied to Ardagh Packaging Finance were triggered before the company’s debt workout was formally implemented, clarifying a point of growing friction for investors and potentially shaping future derivative contracts tied to companies restructuring their debts out of court.