Markit and Creditex held the first-ever LCDS credit event auction on October 23. The duo were the official administrators for the auction of US video store chain Movie Gallery’s defaulted contracts. Establishing a cash settlement price via an auction avoids difficulties arising from the fact that many contract holders might not have a position in the loans underlying CDS contracts.
Movie Gallery was also a constituent of the LCDX, the credit default swap index referencing US leveraged loans.
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