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Derivatives

Norske Skog has triggered credit event, rules ISDA

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The International Swaps and Derivatives Association's EMEA Determinations Committee has ruled that Norske Skog has triggered a restructuring credit event.

ISDA's determinations committee met on Friday, with the 15 members taking part agreeing unanimously that paper firm Norske Skog's recent debt exchange met the conditions for a restructuring credit event. The committee also agreed to hold a credit event auction to determine the settlement price of credit default swaps referencing Norske Skog.

ISDA had initially met at 12pm in London on Monday to discuss the matter, but did not reach a verdict that day. The committee reconvened on Friday at 12pm to hold further discussions. 

Norske Skog's contested debt exchange comes amid a long-running tussle between its secured and unsecured bondholders.

Last week, Norske Skog obtained consent from its €218m 7% 2017 noteholders to exchange those notes for 2026 dated exchange notes, perpetual notes and cash share rights. At expiration, around 76% of the aggregate principal was tendered and withdrawn.

Norske looked to cut net debt by as much as Nkr1bn through the exchange and lower annual cash interest payments by around Nkr150m.

According to DTCC figures, credit default swaps outstanding that reference Norske Skog cover $281m net debt, or $7.1bn gross.

ISDA agreed last Friday to rule on the restructuring credit event.

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