Saturday, August 9, 2014

Banco Espírito Santo Ruled Not to Be in Bankruptcy Event

The International Swaps and Derivatives Association (ISDA), reportedly, has determined that the breakup of Banco Espirito Santo by Portugal's central bank is not a "bankruptcy event."  ISDA was to meet again to rule on whether the Banco Espirito Santo breakup is a "succession event."


Wed., August 6, 2014

A panel of the International Swaps and Derivatives Association today ruled that the Portuguese central bank's decision to break up Banco Espírito Santo won't trigger a payout on insurance-like contracts linked to the stricken lender's debt, the Wall Street Journal reported today. ISDA was asked on Monday to rule whether the Portuguese Central Bank's decision to split BES into two would qualify as a bankruptcy credit event, meaning that any contracts on BES debt—known as credit default swaps—would be activated. In this case, holders of BES's senior bonds look set to remain untouched, but junior bondholders face potentially substantial losses. ISDA ruled that BES isn't in a bankruptcy credit event. Separately, an ISDA panel is preparing to rule whether the BES breakup is a so-called succession event, which could mean existing CDS contracts on BES debt will be transferred to a new bank set up as part of the rescue deal. ISDA said it would meet again to make a decision this Friday.

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