Ahold credit protection trading on upfront-only basis

Credit protection for Dutch retailer Ahold is now trading on an upfront basis only following the company's admission of accounting irregularities.

On Monday the group disclosed "significant accounting irregularities" in its US operations of more than $500 million. Prior to Monday’s development, credit protection for BBB-rated Ahold was priced at around 200 basis points-mid. Five-year credit default swaps widened by around 500bp to 700/800bp.

S&P downgraded the group two notches to BB+. Moody’s followed suit with a four-notch downgrade of the senior unsecured debt to B1 yesterday.

Credit derivative traders in London said intense activity by

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