Norske Skog triggered credit event, according to ISDA rules


The ISDA Determination Committee met on Friday. The 15 participating members unanimously agreed that the recent debt swap of paper company Norske Skog qualifies for a restructuring credit event. The committee also agreed to hold a credit event auction to determine the settlement price of credit default swaps referencing Norske Skog.

ISDA initially met at noon on Monday in London to discuss the matter, but failed to reach a verdict that day. The committee met again on Friday at 12 noon to continue discussions.

Norske Skog’s disputed debt swap comes amid a long-standing struggle between its secured and unsecured bondholders.

Last week, Norske Skog obtained consent from its 2017 7% ticket holders of 218 million euros to exchange those tickets for 2026 dated exchange tickets, perpetual tickets and rights of action in cash. Upon expiration, approximately 76% of the overall capital was surrendered and withdrawn.

Norske has sought to reduce its net debt to NKr 1 billion through the exchange and reduce annual cash interest payments by around NKr 150 million.

According to DTCC figures, outstanding credit default swaps referencing Norske Skog cover net debt of $ 281 million, or $ 7.1 billion gross.

ISDA agreed last Friday to comment on the credit restructuring event.


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