Q: Why are credit event auctions a good mechanism for pricing bonds in default?
A: The main benefit is the transparency of the methodology and the orders entered into the auction. This ensures a fair final result that has the confidence of market participants. The mechanism itself has two important benefits over either cash or physical settlement. Firstly it combines those parts of each existing settlement mechanism that the market in general considers beneficial, whilst looking to minimise the v
The week on Risk.net, July 7-13, 2018Receive this by email