The bond and credit default swap markets have reacted violently to news that Dutch retailer Ahold has overstated its earnings.
At opening on February 24, Ahold’s 2012 euro-denominated bonds were trading in the mid-90s. But after the company announced that it had overstated its Ebidta figures by $500 million in 2002, the bonds collapsed to end the day at around 63 cents in the euro. The following day investors looking to buy protection in the CDS market were forced to pay 37.5% (3,750bp) up f
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