Updated from 9:43 a.m. EDT
Issuers of unregulated derivatives promising a payout in the event of a Lehman Brothers default will pay more than 91 cents on the dollar to settle credit default swaps related to the bankrupt company.
An auction Friday arranged by the International Swaps and Derivatives Association determined the final settlement price on Lehman debt was 8.625 cents on the dollar, meaning that sellers of credit default swaps will have to pony up 91.375 cents on the dollar to those who bought the protection.
Cash settlement of the CDS are to be made on Oct. 21, according to the ISDA. On a conference call, ISDA CEO Robert Pickel said the auction went "smoothly and efficiently." He downplayed concerns about CDS sellers having to come up with the money to settle the trades. ...
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