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Love You… Love You Not…

17 December 2015 by lberuti

As recently as yesterday, COFP ( Casino Guichard Perrachon SA ) was receiving kudos from the market after announcing a new €2Bln deleveraging plan to strengthen its balance sheet, essentially through assets disposal in Vietnam and Asia. The news came as a relief to investors after a tumultuous 6-week-spell during which COFP’s 5-year-risk premium had been increasing relentlessly as fears surrounding the company’s Latam exposure were rising. But today, the company got slammed again after Muddy Waters Capital posted a report branding it a “highly levered hedge fund” and arguing that the debt-cutting plans “are not really deleveraging, but bailing out the chairman”. Despite many analysts reiterating their positive view on the company, COFP’s equity tumbled 12% (it was down 21% at some stage) and its 5-year-CDS was back to its widest level since the 2008 crisis at 375bps.