No Payouts on RadioShack Swaps Amid Lender Clash: PanelSridhar Natarajan
A panel of credit-default swaps dealers and investors ruled that the more than $25 billion of contracts tied to RadioShack Corp.’s debt don’t need to be settled after one of the company’s lenders claimed the company defaulted.
The International Swaps & Derivatives Association committee determined in a unanimous vote that the company hadn’t triggered a so-called credit event, the industry group said on its website. New York-based hedge fund Brigade Capital Management made the request last week, according to two people with knowledge of the matter.
After credit events, buyers of credit swaps are paid the face amount of the contracts, minus the value of the underlying debt.
Credit swaps allow investors to hedge against losses on debt holdings or to speculate on a borrower’s creditworthiness.
RadioShack is fighting off claims by Salus Capital Partners that the retailer violated the terms of a $250 million loan after accepting rescue financing arranged in October by affiliates of its largest shareholder, Standard General. Salus demanded the company repay the debt, while RadioShack said in a filing this week that it’s in compliance with the loan.