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Another EQT buyout goes under the hammer

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Banks will shortly conduct an auction to settle credit default-swaps on debt issued by SSP, the catering group owned by private equity group EQT. SSP recently failed to make a debt payment, according to derivatives trade body ISDA.

It’s not the first EQT-controlled leveraged buyout to run into trouble and trigger a credit event. The first loan CDS in Europe was for EQT’s ceramics products manufacturer Sanitec. The Sanitec recovery was a miserable 33 percent, but that is still by far the highest recovery to date in a European leveraged loan CDS auction.

from Neil Unmack:

No B&B default? Oh yes it is

Has Bradford and Bingley, a bank under the control of the UK government, defaulted?

In June the UK lender chose not to pay interest on some of its lower-ranking debt, leaving bondholders nursing steep losses. The bank says it isn’t in default because the government changed the terms of the securities after nationalizing the lender in February. So that’s alright then.
Now ISDA, the derivatives industry body, has ruled that the failure to pay interest will trigger the company's credit-default swaps.
The decision will mean a bloody payout for the unlucky few who were foolhardy enough to sell protection on the bank’s lower-ranking debt. Recoveries on the contract may be very low, if existent.

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