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Alstom (ALOFP: Baa3/ ): Unintended Consequences....

CREDIT UPDATE
  • It has been pointed out to me that Alstom Perps will have the unforeseen consequence of a Sliding Step-Up if they get an S&P rating.
  • This could potentially see them LOSE equity credit and face the prospect of a Par call.
  • Realistically, a borrower isn't going to ruin its reputation for 3pts and is likely to embark on a Consent Solicitation with noteholders to redraft the docs.
  • Nevertheless, worth knowing about.
  • “Second Step-Up Date” means, following the occurrence of an S&P Rating Event, (i) if by (and effective on) the thirtieth(30th) calendar day preceding the First Reset Date the Issuer’s senior debt is assigned an investment grade rating (BBB-, or its equivalent for the time being, or better) by Standard & Poor’s,29 August 2049; and, if not, (ii) 29 August 2044."

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