LONDON, Oct 2 (Reuters) - A creditor of Japanese lender Aiful Corp asked a credit derivatives industry committee on Friday to decide whether to declare a bankruptcy event that would trigger settlement of credit default swaps.
Japan's second-largest lender to consumers, measured by assets, last month asked creditors for permission to delay repayments on $3 billion in debt.
Aiful ranks among the 1,000 most-referenced names globally in the CDS market, with contracts amounting to nearly $1.3 billion in net notional value and nearly $17 billion in gross notional value, according to data from the Depository Trust & Clearing Corp.
A committee decision that a bankruptcy credit event has taken place would trigger an auction to determine the cash value of CDS contracts on the company.
'We were informed by Aiful that it would become generally unable to pay its debts as they become due in September 2009 or later due to shortfall of funds in hand, unless it suspends scheduled payments to a substantial number of lenders,' Aozora Bank Ltd said in a submission to the committee.
On Sept. 30, 'Aiful in fact suspended scheduled payments of loan principal to all of its lenders,' the bank added.
The notice was posted on the Web site of the International Swaps and Derivatives Association. Keywords: AIFUL AUCTION/CDS (jane.baird@thomsonreuters.com, Reuters Messaging: jane.baird.reuters.com@reuters.net, +442075422471) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Japan's second-largest lender to consumers, measured by assets, last month asked creditors for permission to delay repayments on $3 billion in debt.
Aiful ranks among the 1,000 most-referenced names globally in the CDS market, with contracts amounting to nearly $1.3 billion in net notional value and nearly $17 billion in gross notional value, according to data from the Depository Trust & Clearing Corp.
A committee decision that a bankruptcy credit event has taken place would trigger an auction to determine the cash value of CDS contracts on the company.
'We were informed by Aiful that it would become generally unable to pay its debts as they become due in September 2009 or later due to shortfall of funds in hand, unless it suspends scheduled payments to a substantial number of lenders,' Aozora Bank Ltd said in a submission to the committee.
On Sept. 30, 'Aiful in fact suspended scheduled payments of loan principal to all of its lenders,' the bank added.
The notice was posted on the Web site of the International Swaps and Derivatives Association. Keywords: AIFUL AUCTION/CDS (jane.baird@thomsonreuters.com, Reuters Messaging: jane.baird.reuters.com@reuters.net, +442075422471) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
