Eircom is now the fifth most likely company in the world to default on its debt, judging by credit default swap (CDS) market trends.
The cost of insuring some of Eircom's debt is the fifth most expensive in the world, the Irish Independent reported.
Insurance costs have risen due to the scale of Eircom’s debt – currently around €3.5 billion – and a lack of transparency about the operator’s plans to reduce the figure.
While debt holder ERC Ireland Finance has denied speculation that a debt restructuring or default is inevitable, CDS activity suggests that investors are not confident that these scenarios can be avoided.
Eircom maintains it has a strong cash balance and headroom to deal with the debts – indeed, the majority of its repayment obligations won't be due for more than five years.
However, some Eircom debt holders last week appointed a NY law firm to represent them in the event the telco is forced to refinance its large debt, the Irish Times said.
In January, Eircom was acquired by ST Telemedia for €140 million. In February, the new owners embarked on a major restructuring and cost-cutting drive.