Distressed debt action muted; Abengoa bonds ‘annihilated’ as creditor protection sought

By Stephanie N. Rotondo

Seattle, Nov. 25 – It was a quiet day for distressed bonds as market players elected to take a break ahead of Thanksgiving, a trader speculated.

“The market kind of shut down early today,” the trader said, even though the markets did not technically have an early close. “The markets have gotten hammered so bad that I think people are trying to put their heads in the sand and go have a nice Thanksgiving with their families and forget about their portfolios because it has been so ugly.”

However, investors could not avoid news that Abengoa SA – a Seville, Spain-based renewable energy company – had filed for creditor protections in Spain.

“I have been told that the bonds got annihilated,” a trader said, who noted that he typically doesn’t deal in the name. But he said that “depending on which flavor,” the company’s debt is into the mid-to-high teens.

Earlier in the session, a market source said the 7¾% notes due 2020 weakened to a 15 to 16 context from levels in the low-40s previously.

Abengoa said its decision to enter creditor protection was due to a nixed financing deal with Gonvarri Corporacion Financiera, which had previously agreed to inject €350 million into the company.

Gonvarri was responsible for cancelling the deal, Abengoa said, though it did not provide a reason for the decision.

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