Lehman $9 trln i-rate swap portfolio unwound - LCH

NEW YORK Oct 8 (Reuters) - Lehman Brothers' $9 trillion portfolio of interest rate swaps has been successfully unwound, following the collapse of the major derivative counterparty last month, LCH Clearnet, a central counterparty and clearing house for the securities, said on Wednesday.

Interest rate swaps are used to exchange fixed and floating interest rate payments on a bond, and can be used by borrowers to hedge against the risk of rising or falling interest rates.

Lehman's interest rate swap portfolio comprised 66,390 trades across 5 major currencies, LCH. Clearnet said in a release. The swaps were issued from Lehman's subsidiary Lehman Brothers Special Financing Inc.

The unwind of the book involved first hedging the counterparty risk of the contracts, then auctioning the swaps to other members of SwapClear, LCH. Clearnet's clearing arm. (Reporting by Karen Brettell; Editing by James Dalgleish)