Glitnir debt settled at 3% and 0.125%

Another failed Icelandic bank, Glitnir, has seen its senior debt settled at 3% and subordinated debt at 0.125% in a credit event auction today.

Glitnir was the first of the three main Icelandic banks to fall into government hands - the Icelandic government took a 75% stake for €600 million on September 29, a move that constituted a credit event under the International Swaps and Derivatives Association's guidelines.

Domestic rivals Landsbanki and Kaupthing were respectively taken over by the government on October 7 and October 9.

Today's auction set recovery rates for cash settlement of credit default swaps on the bank's senior and subordinated debt. The low rates mean that sellers of protection will have to pay almost the entire par value of the underlying debt to protection buyers: 97% for senior and 99.875% for subordinated debt.

The auction was administered by New York-based brokerage Creditex and London-based data provider Markit.

On November 4, the auction to settle CDSs on Landsbanki's senior and subordinated debt set recovery rates at 1.25% and 0.125%, respectively.

Tomorrow, Creditex and Markit will run a third auction to establish settlement rates for CDSs on Kaupthing debt.

See also: Landsbanki bonds settled at 1.25% and 0.125%
Icelandic banks in default