Newsline: Parmalat Italy Struggles to Repay Bond
Italian dairy group Parmalat Finanziaria SpA escaped a financial disaster last month when it narrowly cleared a deadline to repay a $183 million bond.
Italian dairy group Parmalat Finanziaria SpA escaped a financial disaster last month when it narrowly cleared a deadline to repay a $183 million bond. The bond was paid Dec. 12, the last day of a grace period. Nonetheless, analysts said Parmalat's difficulties raise concerns about the group's liquidity.
Italian dairy group Parmalat Finanziaria SpA escaped a financial disaster last month when it narrowly cleared a deadline to repay a $183 million bond. The bond was paid Dec. 12, the last day of a grace period. Nonetheless, analysts said Parmalat's difficulties raise concerns about the group's liquidity.
Parmalat claimed in September that it had liquidity of $4.2 billion, so it should have easily met its obligations.
As the deadline approached, Standard & Poor's downgraded Parmalat's corporate bonds from investment grade to junk status and cautioned that it would have lowered its rating to default if the Dec. 8 bond were not honored. The company's stock value dropped 50%.
Reports from Australia prior to the repayment speculated that the Italian firm might unload its Australian holdings. Parmalat said it had no such intentions.
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