LONDON, July 8 (IFR) - Isolux Corsan’s bonds tanked to all-time lows on Wednesday after a Spanish judge rejected company president Luis Delso’s attempt to dismiss an investigation into money laundering, tax evasion and forgery.
The Spanish construction firm’s EUR850m 6.625% 2021 note was bid at a 79.30 cash price on Tuesday morning but plunged more than 12 points to 66.60 on Wednesday, according to Tradeweb prices.
The bonds have since recovered slightly to 69.30.
The investigation focuses on alleged payments made to Jordi Pujol Ferrusola, the son of the former president of Catalonia, in relation to Isolux Corsan projects in Mexico and Gabon.
Luis Delso moved to dismiss the complaint against him on the basis of its generic nature, but Judge Jose de la Mata rejected this on Tuesday, arguing that there is sufficient evidence of wrongdoing.
A spokesman for Isolux Corsan said the company was surprised at the market reaction, describing the investigation as old news.
“It was already out last year and what came out yesterday is just that investigations continue and no formal charges have been pressed against our chairman,” he said. “The company is not part of the investigations, so we don’t really see this as an issue that could affect the business performance.”
The extreme price action comes against the backdrop of heightened nerves around practices at Spanish construction firms.
OHL’s bonds have been under pressure since May, after the Spanish builder’s Mexican unit became embroiled in a corruption scandal as recordings of individuals alleged to be OHL Mexico officials discussing overcharging for a public works project were leaked online.
One bond investor said he felt the negative price action on Isolux’s paper was overdone.
“Headlines like this are not great in a sector that is under pressure, but the fact that Isolux Corsan’s bonds are now yielding 15% versus 9% on OHL’s bonds doesn’t make any sense,” he said. (Reporting by Robert Smith; Editing by Philip Wright, Julian Baker)