France's Casino CDS auction values bonds at 1 cent

BY Reuters | CORPORATE | 09/25/23 10:32 AM EDT

LONDON, Sept 25 (Reuters) - Investors who bought default insurance on France's Casino Guichard Perrachon SA bonds are getting a nearly full payout after a committee that reviews disputes in the credit default swaps (CDS) market said a credit event had occurred.

An auction to settle Casino's CDS contracts was held on Monday and established a price of 1 cent in the euro for the unsecured bonds against which the CDS provide insurance, according to a statement from Creditfixings, part of S&P Global Market Intelligence.

This means that CDS holders are entitled to a payout of 99% of the bonds' face value, calculated as the difference between 100 and the bonds' price set during the auction.

The first part of Monday's auction showed net open interest to sell stood at 197.3 million euros ($208.7 million), said Creditex and Markit, who jointly run the auction process, in a statement posted online. ($1 = 0.9452 euros) (Reporting by Chiara Elisei, editing by Karin Strohecker)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.