Markit and Creditex, in partnership with major credit derivative dealers, today announced the results of a Credit Event Auction conducted to facilitate settlement of credit default swap (CDS) trades referencing Station Casinos, Inc.
At 2:00 PM ET today, the final price of Station Casinos bonds for the purpose of settling CDS transactions was determined to be 32% of par value. The final price represents the recovery rate used to cash settle credit derivative trades. Protection sellers compensate protection buyers for the loss on defaulted obligations by making a payment equal to par value minus the recovery rate.
Markit and Creditex are the official administrators of Credit Event Auctions. During a Credit Event Auction, dealers submit orders electronically on the Creditex platform. The auction submissions are delivered to Markit electronically. Markit calculates and verifies the results, and publishes them on www.creditfixings.com.
The Credit Event Auction process was launched in 2005 by Markit and Creditex in collaboration with the International Swaps and Derivatives Association and major credit derivative dealers. Since then, Markit and Creditex have conducted 44 Credit Event Auctions, including today’s Station Casinos auction, and the process has become an integral part of CDS market infrastructure.