Debt market round up: First loan credit event auction held
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. Previous CDS auctions have referenced bonds.