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In June, GSO Capital Partners LP, a unit of the Blackstone Group LP provided a loan to Codere SA, a Spanish gaming operator who owns betting parlors and race tracks in Europe and South America. Interestingly, the terms of the loan provided a guaranteed return on credit default swaps, which outmaneuvered sellers of the protection. In other words, the case highlights the fact that interests of lenders and debt traders aren’t always aligned. Primarily, those in a position of influence have the ability to affect whether the contracts get triggered.

1. Was Jon Stewart’s satire helpful in understanding the transaction? Why or why not?
2. What is a credit default swap and how would Codere account for this transaction?
3. What is Codere’s debt rating? What does that mean in terms of all other debt rating? Explain the debt rating system.

Ruhle, S., M. Childs, J. Miecamp. (2013). Blackstone Unit Wins in No-Lose Codere Trade: Corporate Finance. Bloomberg News, Oct. 22 (Retrievable online at
Stewart, J. (2013). Video, Dec. 4 (Retrievable online at—codere)