Portugal

The principle of pari-passu among bondholders lies dead and buried. The Bank of Portugal’s decision to select only five of Novo Banco’s 52 senior bonds for bail-in last week has established a new precedent for bank resolutions, and what a fine mess it has created.

Back in August 2014, I wrote a note that highlighted how the restructuring of Banco Espirito Santo (BES) exposed flaws in the 2003 ISDA credit default swap definitions, flaws that should be remedied by the new definitions introduced later that year.

The Bank of Portugal ripped up the resolution rule book for its controversial bail-in of five Novo Banco senior bonds last week, throwing uncertainty on future resolutions and leaving investors to reassess their relationship with Portuguese bank debt, Tyler Davies reports.

ISDA’s Determinations Committee has decided to hold a second day of discussions on Novo Banco, after failing to reach agreement on Wednesday over whether the Portuguese bank has triggered a government intervention credit event or a succession event.

ISDA’s Determinations Committee will meet at 12pm London time on Wednesday to decide whether Portugal’s Novo Banco has triggered a government intervention credit event, but will also deliberate a succession event in relation to the transfer of senior bonds to Banco Espirito Santo.

The principle of pari-passu among bondholders lays dead and buried. The Bank of Portugal’s decision to select only five of Novo Banco’s 52 senior bonds for bail-in last week has established a new precedent for bank resolutions, and what a fine mess it has created.

The International Swaps and Derivatives Association has accepted a request from investors to rule on whether Portugal’s Novo Banco has triggered a government intervention credit event.

The Bank of Portugal has made an unexpected decision to transfer five of Novo Banco’s senior bonds to Banco Espirito Santo (BES), raising legal questions about how the notes were selected.

Corporate borrowers in peripheral Europe have a golden opportunity to borrow thanks to the ECB’s targeted long term refinancing operation (TLTRO) help for banks – stalling the march towards bond and private placement predominance.

The yield on Portuguese government debt fell on Wednesday after socialist leader Antonio Costa was named prime minister. The new government is expected to bring some stability after several weeks of uncertainty.

European bond markets have shown remarkable resilience to international political tensions this week, but with the US market out on Thursday for Thanksgiving, the primary markets are expected to remain quiet.

CVC Capital Partners sold its last shares in Abertis Infraestructuras, the Spanish toll roads and telecoms infrastructure company, on November 19 in an €818m block trade that gave Bank of America Merrill Lynch’s league table standing a big boost.