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Auctions · Europe

Orinoco Retail auction excludes subordinated notes from the senior deliverable list

Holders who hedged subordinated paper with senior CDS carry basis risk into settlement.

Orinoco Retail Holdings plcAuctions

Sample story · fictional entities

What happened

Filed document

Following a Failure to Pay determination, the settlement terms for Orinoco Retail's senior transactions listed two senior bonds and one loan as deliverable. The 7.5% subordinated notes were not included.

As stated in: Auction settlement terms.

Why it may matter for CDS

CDSBench interpretation

Only obligations meeting the Not Subordinated characteristic relative to the Reference Obligation can be delivered into senior contracts. Subordinated holders hedged with senior protection face a mismatch between the auction price and their own recovery.

CDSBench’s reading, not part of the source and not a statement that a Credit Event has occurred. General information, not legal or investment advice.

What is established

  • A Failure to Pay was determined for senior transactions.
  • The subordinated notes are contractually junior to the senior notes.

What remains unresolved

  • Whether a separate subordinated auction will be held.
  • The final price and how far it differs from subordinated recovery expectations.

Source context

Source
Auction settlement terms
Status
Filed document
Context
Illustrative settlement terms prepared for this preview. No real auction or price is described.

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