Bonds plummet in Altice revolving door scandal

Investigations by Portugal’s criminal investigations department into alleged illegal activities at the country’s telecoms giant Altice Portugal has undermined confidence in the company’s bond issues which have plummeted 15% in value.

The value of 11-year Altice International bonds — the company operates in Portugal, Israel and the Dominican Republic – took a hammering after it was announced that Portugal’s Public Ministry carried out searches on Thursday last week as part of ‘Operation Picoas’ with investors now demanding higher yields for these bonds because of a greater perceived risk of getting their money back.
The legal investigation involves various top brass figures at the company including the group’s co-founder Armando Pereira and the co-CEO of Altice Portugal Alexandre Fonseca.
The judicial authorities suspect crimes of corruption, fraud, tax fraud, falsifying documents and money laundering.
On Monday, on the same day that the group communicated that various executive directors at the company has been temporarily suspended pending the outcome of criminal investigations. That day the value of the company’s bonds plummeted 11.28% — the biggest fall in value since the bonds were issued in 2017.
The decision by co-CEO Alexandre Fonseca to temporarily suspend his executive activities occurred after his house was searched by police over suspicions of having received money illegally for fictitious services provided to companies belonging to Armando Pereira.
On Tuesday the value of the bonds that mature in 2028 slid 3.37% to €0.54,356. The value of Altice International bonds that mature in August 2029 has fallen by 4% since the Public Ministry investigations were made public.
Tomás Mannion, an analyst at Sarria told Bloomberg that it was still too early to understand the true consequences and impact of the police investigation on the medium to long-term value of Altice International bonds or the effect on the company’s rating.