JVC Kenwood puts bond holders through the mixer

Japanese electronics company JVC Kenwood may have triggered a restructuring credit event on its credit default swaps, according to a question posed yesterday by Barclays Capital to the Isda credit derivatives determination committee.

On 8 August, the company, which trades in the credit market as Victor Company of Japan, announced that it has changed the terms of one of its bonds. It extended the maturity date of its JPY12 billion ($156 milllion) 2012 bonds so that half the principal would be paid back one year after the original maturity with the rest due two years after that. The company blamed the change, which appears to fall clearly within the credit derivatives definition of restructuring, on the fact that JVC’s recent downgrades make it “difficult to issue new bonds at the moment”.

The company, which is currently rated BB- by Japanese rating agency R&I, has JYP20 billion of unsecured bonds and JPY10.6 billion of loans outstanding according to its most recent annual report. According to Markit, credit default swap spreads on the name have widened from around 300bp in July to over 800bp. The credit default swap closed today at 875bp.