Avon CDS holders win payout despite narrow debt auction
With swap volumes outweighing eligible deliverable debt, holders feared contracts could be worthless
Buyers of credit protection on recently bankrupt Avon Products are set to receive chunky payouts on their contracts, despite the possibility that a ruling by the committee in charge of adjudicating on credit events could have left them with little to gain.
Tuesday’s (September 24) auction of outstanding debt, which was used to set a price for settling credit default swap (CDS) contracts, ultimately left holders with a 66% payout on their swaps.
The return could have been much lower as net CDS
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