Bondholders in Austrian ‘bad bank’ Heta hit by significant haircut

 
Oliver Gill
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Austria's financial regulator said the new package of measures ensures the equal treatment of creditors (Source: Getty)

Creditors in Austrian “bad bank” Heta Asset Resolution will receive less than half of their money back according to the country’s financial regulator, the FMA.

An FMA statement outlined that senior bondholders could expect to receive at least 46c/€ which would be paid from the realisation of assets by 2020 – and said that this had been calculated using “very conservative” assumptions.

“This package of measures also ensures the equal treatment of creditors. Orderly resolution is more advantageous than insolvency proceedings,” the FMA said.

Bond maturities, however, will be extended to 31 December 2023 as “all currently outstanding legal disputes will realistically only be concluded by the end of 2023”. “Only at that point will it be possible to finally distribute the assets and to liquidate the company,” the regulator said.

In November 2015, the largest collection of creditors, which included Commerzbank AG, FMS Wertmanagement AoeR, Pacific Investment Management Co and a collection of distressed debt investors, proposed to extend bond maturities for 30 years in return for repayment in full.

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