Swap Auction Sets CIT Bond Value At 68%

Law360, New York (November 20, 2009, 5:30 PM EST) -- Concluding the largest credit default swap auction to date, credit derivatives traders on Friday reportedly set a value of 68.125 cents on the dollar for bankrupt commercial lender CIT Group Inc.’s defaulted bonds.

The auction results mean that sellers of credit default swaps on the CIT bonds are required to pay buyers of protection 31.875 cents on the dollar to settle the contracts, Reuters reported.

With CIT defaulting on its debt, the swap sellers are required to pay the buyer the full sum insured, minus the...
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