Markit today announced that in response to Metro-Goldwyn-Mayer Inc.’s (“MGM”) failure to pay interest on its senior secured loan due on September 30, 2009, Markit LCDX index dealers have voted for a Credit Event Auction to be held to facilitate settlement of loan credit default swap (LCDS) trades referencing the company. The Event Determination Date for MGM is October 20, 2009. MGM is a constituent of series 8, 9, 10 and 12 of the Markit LCDX index; however, it was removed from the LCDX Series 13 that began trading on October 2, 2009.
The auction terms, including the auction date, will be determined by Markit LCDX dealers according to LCDS Auction Rules published on the International Swaps and Derivatives Association (ISDA) website. Markit and Creditex are the official administrators of Credit Event Auctions. The auction date and an auction timeline will be posted on www.creditfixings.com.
The Credit Event Auction process was launched in 2005 by Markit and Creditex in collaboration with the ISDA and major credit derivative dealers. Since then, Markit and Creditex have conducted over 70 auctions and the Credit Event Auction process has become an integral part of CDS market infrastructure.
