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A New Start for Isolux

08 August 2016 by pdonnat

The Credit Derivatives Determination Committee ruled last Friday that a Bankruptcy Credit Event occurred with respect to ISOLUX (Grupo Isolux Corsan Finance B.V.). The Spanish engineering and construction company is defaulting on 850M Eurobond issued in 2014 and multiple credit facilities. Some creditors will own between 90% and 95% of the company according to the restructuring agreement. The Isolux CDS did not trade during the financial crisis. It started to trade in October 2014.It was one the new high yield CDS added to the iTraxx Europe Crossover Series 22. The CDS started to trade around 600bps with an implied 5Y default probability at 40%. The premium kept widening over the last 2 years with ups and downs according to cash generated from assets’ sale, IPO and corruption scandals. After all, investors are paying the price for heavy investments in solar energy in 2007 and 2008 when solar energy was still heavily subsidised in Spain.