Credit traders at Goldman Sachs Group Inc. are betting against bonds of Adler Group SA, the embattled real estate firm that's been a target of short seller Fraser Perring's Viceroy Research.

The bank's traders in London have been buying credit-default swaps linked to Adler in recent weeks, which will pay out if the German property company defaults, according to people familiar with the matter. They are also taking a so-called short position that will profit if the firm's bonds fall further, the people said, who asked not to be identified because they're not authorized to talk about the trade.

Adler's shares and bonds have been consistently under pressure since Viceroy Research published a report in October that said the firm was built on systemic fraud. Its debt pile of around $9 billion includes more than a billion dollars of bonds that Goldman Sachs' investment banking unit helped to sell to investors several years ago, Bloomberg data shows.

Sebastian Howell, a spokesman for Goldman Sachs in London, declined to comment. Matteo Twerenbold, a spokesman for Adler, declined to comment.

Goldman Sachs joins JPMorgan Chase & Co. in betting against against the company. One of Adler's largest lenders, New York-based JPMorgan opened a short position on the firm in the summer of last year, ahead of the turmoil that saw its shares crash to record lows.

A spokesperson for JPMorgan declined to comment.

Adler shares plunged as much as 23% to the lowest on record last week after it announced the postponement of its financial results when investigators probing fraud allegations said they needed more time.

Credit-default swaps linked to Adler subsidiary Adler Real Estate have surged to near-record highs this year. These are contracts based on bonds and loans that investors use to speculate on a borrower's ability to repay debts.

The firm's bonds saw their biggest drop since Viceroy published its report. The 400 million-euro ($452 million) Adler Group bond due to mature in 2024 lost almost 6 cents on the euro to 85 cents in recent days, and its bonds are among worst performing in Europe's high-yield index.

Adler Real Estate was among several firms that began to come together in 2019 through a series of complex mergers to form Adler Group. Today, it is one of Germany's biggest landlords.

Goldman Sachs was among lenders that helped Adler Real Estate sell 1.6 billion euros of bonds to investors since 2017, according to Bloomberg data. About 1.1 billion euros are still outstanding.

The Wall Street giant's ties to Adler Real Estate went further than just selling bonds. The New York-based bank also operated two separate borrowing facilities worth a combined 325 million euros, according to a 2017 prospectus.

Goldman Sachs' debt bankers didn't take part in a series of deals for the newly formed Adler Group in 2020 and again in 2021, however, Bloomberg data show. JPMorgan, Deutsche Bank AG and Barclays Plc helped the combined firm sell more than 2 billion euros of bonds, according to the data.

Donal Griffin and Laura Benitez report for Bloomberg News.

Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.