Europcar CDS worthless as auction misfires

Europcar adobe stock 575x375
By Owen Sanderson
14 Jan 2021

Some €700m of CDS contracts referencing Europcar’s debt have been rendered worthless thanks to a technical squeeze in the CDS auction on Wednesday, in a blow for investors who thought they’d hedged their exposure to the troubled car rental firm. The controversial result threatens to reignite debates about whether the CDS market is fit for purpose, ahead of an expected wave of restructurings in the year to come.

Europcar had been in restructuring negotiations for most of the second half of 2020, following the collapse in car rentals as the pandemic crushed the travel industry. It finalised terms with a group of its creditors in early December, in a deal which would see all of ...

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