Derivs - Credit

European regulators have dealt a blow to credit default swap investors who are seeking legal reparations against banks on charges of collusion, after the European Commission ditched its long-running antitrust investigation of 13 major banks, citing insufficient evidence.

Abengoa avoided triggering a bankruptcy credit event on Tuesday by only a single word change in legal documentation after ISDA spent more than a week boggling over Spanish laws and its own credit derivative definitions. But as GlobalCapital went to press, the firm looked to be on the brink of triggering a failure to pay credit event instead, having acknowledged it had missed commercial paper repayments. Dan Alderson reports.

The movement of one word – 10 places to the left – in ISDA’s credit derivative definitions was the determining factor in the trade body deciding that Abengoa had not triggered a bankruptcy credit event for most of its credit default swaps.

Abengoa’s decision to seek insolvency protection is a bankruptcy credit event trigger for some credit default swaps referencing the company but not others, ISDA’s Determinations Committee has ruled.

The European Union’s Economic and Financial Affairs Council (Ecofin) got 10 of the 11 countries discussing a financial transaction tax to agree on elements of the levy on Tuesday, and are intent on continuing work on the rule in 2016.

ISDA’s Determinations Committee on Friday delayed for the third time making a decision on whether Abengao has triggered a bankruptcy credit event, saying it needed more information.

European regulators have ditched a long-running investigation of 13 major banks on charges of collusion in the credit default swap market, citing insufficient evidence.

Credit options were the worst hit of volatility strategies on Thursday, said traders, after the European Central Bank unveiled provisions that many in the market found underwhelming.

Puerto Rico’s development bank made a $354m debt payment this week, narrowly staving off default.

Credit default swaps referencing Havas surged out this week to their widest levels since 2013 as the borrower brought a €400m bond amid a flurry of euro deals.

The question of whether Abengoa has triggered a credit event will set a precedent for future Spanish rulings say lawyers, as ISDA’s Determinations Committee grapples with recently amended Spanish laws.

Holders of credit default swaps referencing Abengoa have asked the International Swaps and Derivatives Association for the second time in a week whether the Spanish renewable energy company has triggered a bankruptcy credit event – and this time the ISDA has accepted the question for consideration.