Markit Group Limited ("Markit") and Creditex Group Inc. ("Creditex") today announced that a Credit Event Auction for Quebecor World Inc. will take place on February 19, 2008 with 13 participating dealers. The auction is being run in accordance with the ISDA 2008 Quebecor CDS Protocol. Creditex and Markit will act as official auction administrators. Quebecor World Inc., a Canadian commercial printer, missed a January 15, 2008 interest payment on its senior notes and filed for protection from creditors on January 21, 2008, triggering a credit event on its CDS contracts referencing the company.
The Credit Event Auction mechanism is designed to ensure orderly and operationally efficient trade settlement for credit derivatives by determining the final cash settlement price for defaulted Quebecor CDS contracts. The auctions have become integral to the infrastructure of the global credit derivatives market which has grown at a rapid pace over the last few years to more than $45 trillion in notional outstanding.
Quebecor is the 9th corporation for which a Credit Event Auction is being held. It follows an auction held in October 2007 for Movie Gallery, and marks the second corporation for which a Credit Event Auction helps cash settle a wide range of credit derivative instruments including single-name CDS. "Given the enormous growth of the market and particularly during this period of market volatility, the Credit Event Auctions have become essential to efficient settlement of credit derivatives," said Mazy Dar, chief strategy officer at Creditex. "The mechanism is tested and proven and we are ready to go for this auction next week."
Kevin Gould, executive vice president and Head of Data Products and Analytics at Markit, commented: "The fixings process is clearly a critical piece of the credit derivative market infrastructure, and we expect it will continue to be for the foreseeable future. We have been part of this process for close to three years now, and take our role very seriously."
During the Quebecor Credit Event Auction, major dealers will submit orders electronically on the Creditex platform. Markit will then calculate and verify the auction results, publishing them on the official website http://www.creditfixings.com/. The final auction results will be published at 1400 EST on February 19.
The Credit Event Auction process was launched in 2005 by Markit and Creditex in collaboration with ISDA and major credit derivative dealers to facilitate the settlement of credit derivative contracts in the event of a corporate default. Previous auctions were held for Movie Gallery, Collins & Aikman, Delta Air Lines, Northwest Airlines, Delphi Corporation, Calpine Corporation, Dana Corporation and Dura.