Groupama Bonds Plunge After Missed Payment

Groupama’s undated hybrid bonds plunged after the French insurer, hurt by Greek sovereign-debt losses, said it would skip the next interest payment on one of the bonds. Groupama’s 1 billion euros of junior subordinated bonds, which have no stated maturity date, fell to 41.13 cents on the euro at 12:10 p.m. Paris time from 51.02 cents, according to Bloomberg generic prices.

“If you stop paying a coupon you’re in severe financial difficulties,” said Philippe Picagne, a credit analyst at CreditSights who has a “market perform” rating on the bonds, which he’s planning to change.

“It’s a very poor signal and you will be highly penalized if you return to the capital market. We are extremely surprised and disappointed.”

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