November 27, 2017 / 9:33 PM / a year ago

ISDA panel to reconvene on Venezuela CDS auction

NEW YORK, Nov 27 (IFR) - An industry committee will reconvene on Tuesday to discuss terms of two auctions that will determine the payout on some US$1.5bn of CDS contracts tied to Venezuela’s bonds.

The 15-member committee, organised by the International Swaps and Derivatives Association (ISDA), declared Venezuela and state-owned oil company PDVSA in default earlier this month after the country failed to make timely payments on some of its bonds.

That decision will trigger payouts to holders of Venezuela’s and PDVSA’s credit default swaps - derivative contracts investors use to hedge their risks.

The committee now needs to come up with a list of bonds that will be delivered into the auctions - one for Venezuela and one for PDVSA.

It will hold its next conference call on the issue on November 28 at 2:00pm, New York time, it said in a statement posted on ISDA’s website on Monday.

The auction process will determine how much the bonds are worth and, in turn, the cash compensation buyers of CDS protection will receive.

The face value of net CDS contracts outstanding on Venezuela’s sovereign bonds is around US$1.3bn, according to data from clearing house Depository Trust & Clearing Corporation.

On PDVSA, net CDS contracts outstanding total a smaller US$250m. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)

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