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Report: Hedge fund files court claim against Novo Banco over bonds defaulting

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Report: Hedge fund files court claim against Novo Banco over bonds defaulting

Hedge fund Winterbrook Capital has filed a court claim against Novo Banco SA over what the fund says is a default on its senior bonds, the Financial Times reported July 3, citing a spokesperson for the bank.

The London-based firm filed the claim in a U.K. court on June 27, the court filings reportedly show, saying that the default event on the Novo Banco bonds it holds had been inadvertently triggered by ongoing Portuguese central bank efforts to clean up the legacy bad loans of Banco Espírito Santo SA, the failed lender out of which Novo Banco was created.

Winterbrook case rest on a decision by the central bank to keep an $853 million loan owed to Banco Espírito Santo in the bad bank the state created in 2015, thus affecting the guarantees underpinning Novo Banco's senior bonds, newspaper reported.

The filing came on the same day the Portuguese bank has raised €400 million in as Tier-2 bond issue.