03 August 2015 by lberuti
We have voiced a few times our frustration because of the lack of liquidity on the most recent inclusions in the iTraxx Crossover (ITXEX) indices. So it is only fair to mention that ABGSM (Abengoa, SA) is one of the names which actually benefitted from being included in ITXEX since the series 21. It has seen volumes traded holding at respectable levels since the beginning of the year, and activity could remain high over the next few weeks/months for reasons the company’s debt holders will not appreciate though. The call between ABGSM’s management and analysts on Friday left the latter scratching their head as the company which previously appeared committed to de-levering announced out of the blue a capex increase and reduced FCF guidance. The communication around how the €500mln bonds due in 2016 will be managed was not very convincing either. Investors pushed the 5 year risk premium 12pts higher to 48.25pts (insuring $1 of ABGSM’s bond against a default costs 48.5cts spot and 5cts per year afterwards) and the 1 year risk premium to 30pts upfront.