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The Maturity Of The Risk Matters

30 January 2015 by lberuti

NSINO ( Norske Skogindustrier ) announced last week a new senior secured bond deal, combined with a proposed exchange offer for the existing unsecured notes. If the exchange is successful, most of the 2015/2016/2017 notes will be redeemed, and a portion of the claim of present creditors will be rolled into new notes maturing in 2021. While contradicting views on the medium term prospects of the company have led to an incredible spell of volatility on the 5 year risk premium, investors expect the proposed deal to go through and see default risk as dramatically lower through the end of 2016. If you play with the maturity of the risk premium in the top right corner you will see that while the 5 year maturity has been all over the place, the 1 year has been much more stable after the initial repricing.