An auction to determine payouts on credit default swaps tied to defaulted electronics retailer radioshack was not disrupted by an imbalance in the number of bonds available to be delivered into the auction last week, as some had feared. CDS holders will receive payouts of 89.5 cents on the dollar after the reference bond was valued at 11.5 cents on the dollar via an auction held last Thursday, according to data from Creditex Group and Markit. Holders will be paid out US$479m in total, according to data from the Depository Trust and Clearing Corporation. Market participants had raised concerns leading up to the auction that a dearth of outstanding bonds available to be delivered into the auction would skew prices for the physical bonds and/or the CDS payout when the auction occurred. There was only US$324m outstanding on a single bond maturing in 2019 for delivery into auction, and a net US$479m due to be paid out from CDS contracts (see "RadioShack CDS payouts face trouble", IFR 2071, p54).
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