SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Credito Real is set to fight an involuntary bankruptcy petition by a group of bondholders by saying it was “improper and was filed as a litigation tactic in the U.S. by certain alleged minority creditors to gain leverage in negotiations with the company”. The bondholders who filed the involuntary Chapter 11 petition were Institutional Multiple Investment Fund, Banco Monex and Solitaire Fund, who hold over $8mn of the company’s USD 8% 2028s. As per sources, the filing has the backing of a larger group of unsecured creditors. Regarding the next steps, the distressed lender must respond to either agree to put itself under court protection or fight the creditors in court. A bankruptcy judge will ultimately decide whether to keep the company in bankruptcy, or dismiss the case. The company is unlikely to be in favor of being forced into bankruptcy as evidenced earlier this month. In early June, it fired legal and financial advisers who had been preparing to guide it through a Chapter 11 bankruptcy filing and instead preferred pursuing insolvency proceedings in Mexico. Credito Real has been in default after not paying its CHF 2.875% bonds due February 2022 coupled with a $50mn loan default to BNP Paribas.

Most of its dollar bonds are trading at distressed levels of around 6 cents on the dollar.

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