IntercontinentalExchange’s Creditex subsidiary and Markit will conduct a Credit Event Auction to facilitate settlement of credit default swaps (CDS) trades on Sino-Forest Corp. on May 9 2012. This will be the first credit event auction to be held in the Asia ex-Japan market.
Earlier this year, the International Swaps and Derivatives Association, Inc. (Isda) determined that a credit event had occurred with respect to Sino-Forest Corp., a Chinese forestry company. The auction will serve to determine the final price on Sino-Forest bonds for the purpose of settling CDS transactions.
The Credit Event Auction process was launched in 2005 by Markit and Creditex in collaboration with Isda and major credit derivative dealers. Since then, Markit and Creditex have conducted over 120 Credit Event Auctions, and the process has become an integral part of CDS market infrastructure.