Moody’s degrades Espirito Santo Financial Group’s debt one step away from default

The credit rating agency Woody’s has cut the solvency note of the long-term debt of Good Finance Insurance Group (GFIG) in three steps, which goes from ‘B2’ to ‘Caa2’, which leaves it a step away from being considered default. Likewise, the agency maintains the ratings of the Portuguese entity under surveillance for a possible reduction.

Reduction reflects the higher risk profile


The reduction reflects the higher risk profile of GFIG in Woody’s opinion as a result of the entity’s greater exposure to Honest Bank.

“The financial problems of these two companies have been the catalyst for the weakening of the solvency of GFIG in recent months,” said the rating agency.

Likewise, the “lack of transparency” regarding GFIG’s financial position and the scope of the links within the group have accentuated Woody’s concerns.

On the other hand, the agency indicates that it keeps the entity’s rating under negative surveillance in order to reduce the “opacity” and obtain the necessary information to understand the extension of GFIG’s present and future exposure to other parts of Cooperative Group , as well as the risks associated with this exposure.

See Woody’s rating scale


By the way, today the actions of Thrift Bank extend their ordeal one more day at the Good Finance, where more than 4% were left and already accumulate a collapse of almost 50% since the end of May, after The information appeared in the Portuguese press about the debt restructuring of its Luxembourg subsidiary, Honest Bank.

In turn, Good Finance Insurance Group (GFIG), a reference shareholder of Thrift Bank (BES) with a 25.1% stake in the entity, left almost 8% in the session and reduced its value by half In the last month and a half.

At the end of last May, Good Finance Insurance Group (GFIG), owner of the BES, identified in an audit commission “materially relevant irregularities” in the ESI accounts after reviewing its consolidated financial accounts between September 30 and 31 December 2013.

In this regard, the Portuguese ‘Business Journal’ reported on Wednesday that the entity prepares an ESI debt restructuring plan consisting of extending the maturity dates instead of reducing the value of the debt.

Carrying out a swap of the debt


“The plan must be presented to the authorities of Luxembourg, where the domicile of the entity is located, before being presented to the creditors,” says the newspaper that points out the option of carrying out a swap of the debt of its subsidiary separately. Honest Bank

For its part, the Portuguese newspaper ‘Dedicto’ reported that the creditors of the family holding company had received the proposal to exchange this for shares. Specifically, the proposal would include the exchange of 85% of the debt per share and the remaining 15% for long-term debt.

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