Credito Real defaulted on the principal payment of its CHF 170mn ($180mn) 2.875% bond due February 9 and was subsequently downgraded by Fitch to RD. from CC. Fitch also downgraded its unsecured debt notes to C/RR4 from CC/RR4. “Potential cross-acceleration clauses in its other debt may be triggered by the non-payment of the Swiss bond”, Fitch added. The bond does not have a grace period and Credito Real’s negotiation efforts to make the payment have still not yielded any result. Separately, Credito Real’s board members voted to replace five members of the board and to include more independent directors. Looking forward, Credito Real has $249mn of bonds that come due in July 2023. The company hired DLA Piper and FTI Consulting to explore restructuring options with Fitch noting that if the debt restructuring is initiated it would constitute a Distressed Debt Exchange (DDE) (Term of the Day, explained below).

Credito Real’s USD bonds were down with its 7.25% 2023s down 11 points to 24.1 cents on the dollar and its 9.125% Perps down 5.62 points to 12.75.

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