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PORTEL: The Odd One Out

12 January 2015 by lberuti

Despite some volatility, the credit market felt resilient today and credit indices closed tighter across the board, even though they underperformed equities. But some names are currently having a tough time, and most notably PORTEL ( Portugal Telecom SGPS SA). In fact, it has been the case since the beginning of the year: while iTraxx Crossover is a bit tighter year to date, PORTEL’s 5 year risk premium is 76bps wider. It has been rumoured for some time that PORTEL’s shareholders could agree to postpone a vote on whether to sell assets to Altice during their meeting today, and this effectively happened. The vote will not be held until the 22nd January, as some fear the deal could endanger the proposed merger between PORTEL and the Brazilian carrier Oi, which has already been complicated by the PORTEL’s catastrophic investment in Rioforte papers. The asset sale to Altice might not make a material difference to PORTEL’s fundamentals as the money would probably be spent on TIM anyway, but the announcement of the vote’s delay certainly added to uncertainty and contributed to the negative feeling towards the name.