Return of Troubled Brokerage Adds New Twist to Etihad Bond Saga

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Holders of $1.2bn of structured bonds backed by defaulted airlines such as Air Berlin and Alitalia received surprising news on Monday, after a regulatory filing showed that a troubled Luxembourg brokerage will carry out a crucial role to help manage these defaults, reversing an earlier announcement that it was unable to perform the task, the Financial Times reported. The fate of the $1.2bn of debt at two special purpose vehicles tied to Etihad has been in the balance since last summer after the collapse of Italian airline Alitalia and Germany’s Air Berlin. The Abu Dhabi carrier had snapped up stakes in the two airlines as part of an ill-fated push into Europe. Etihad is under no legal obligation to help the bondholders of the SPVs, but expectations have grown that there will be some sort of bailout, as the debt was largely placed with local investors in the Middle East. Luxembourg brokerage Anoa Capital holds the role of “remarketing agent” on the two bonds, a process by which underlying loans that default are auctioned off to raise cash. Read more. (Subscription required.)