Richards Kibbe & Orbe attorneys Matthew Hughes, Andrew Martin and Paulina Spencer published "Secondary Trading of Novo Banco Bonds: Risks and Protections" as part of the RK&O Market Flash series. In the alert they discuss the risks associated with trading Novo Banco bonds and ways in which to mitigate those risks.
There are several risks associated with the trading of Novo Banco bonds. The main risks arise from two potential scenarios. The first is that the bonds fall within the “excluded liabilities” under the resolution measures. The second risk scenario is the “re-transfer risk”. Under the resolution measures Novo Banco may transfer, at any time, any assets or liabilities back to 'bad bank', Banco Espirito Santo.