The European Central Bank (ECB) has sold more than €150 million worth of bonds issued by Worldline SA, a French payments processor facing mounting allegations over its dealings with high-risk and fraudulent clients.
According to people familiar with the matter, the ECB began approaching credit investors late last week and completed the bulk of the sales on Monday. The central bank continued marketing some of the debt on Tuesday and plans to fully divest its holdings in the company.
This marks a rare move for the ECB, which usually holds on to its corporate debt purchases, even when market values fall. However, it has previously sold bonds in distressed cases, including those of scandal-hit retailer Steinhoff and Spain’s supermarket chain Dia.
Allegations of Ignoring Fraud Warnings
Worldline came under sharp scrutiny in June when the European Investigative Collaborations (EIC) network reported that the company had overlooked warnings and maintained relationships with prohibited and high-risk customers.
Following the revelations, Worldline’s shares plunged 38% in a single day. In response, the company said its fraud ratio was below the industry average and that its leadership was committed to strict compliance with regulations.
Despite these assurances, Belgian prosecutors have since opened a money-laundering probe into its local unit. Worldline has also hired an external firm to audit its client portfolio after concerns about its links to fraudulent customers.
Bonds Downgraded to Junk Status
Worldline’s financial position has weakened in recent years. Once valued at nearly €23bn at its 2021 peak, its market capitalisation now sits around €740mn.
The company’s bonds, which the ECB bought when they were investment grade, have taken a hit since the allegations surfaced. Both its €500mn bond due in 2027 and €600mn note maturing in 2028 fell by about 2 cents on the euro last week before recovering slightly.
In June, following the EIC report, some of its bonds dropped around 10 cents to 85 cents on the euro. More recently, S&P downgraded Worldline’s debt to junk, citing risks from client terminations and supply chain challenges.
A Rare Move with Broader Implications
The ECB and Worldline have declined to comment on the bond sales.
For the ECB, the decision underscores its willingness to distance itself from companies embroiled in controversy, even though it is not required to sell downgraded bonds. For Worldline, it is the latest blow in a series of setbacks that have eroded investor confidence and market value.
