Reporting by Karen Brettell; Editing by James Dalgleish
REUTERS
NEW YORK, Jan 6 (Reuters) - Sellers of protection on bankrupt Tribune Co's bonds are facing losses in the area of 96.5 percent of the insurance they sold, based on the initial results of an auction on Tuesday published by auction administrators Creditex and Markit.
An auction to determine the value of Tribune's credit default swaps indicated the contracts were worth 3.5 cents on the dollar, Creditex and Markit said.
Credit default swaps insuring Tribune's loans are expected to recover 22.75 percent, based on initial auction results, meaning protection sellers are facing losses of 77.25 percent the amount of insurance they sold.
Final results of the auction are expected to be published at 1500 EST. Tribune filed for bankruptcy in December, after taking on about $13 billion of debt when it went private in 2007, in a deal led by real estate mogul Sam Zell.
The net open interest was $765 million to sell Tribune's bonds and $2 million to sell its loans, Creditex and Markit.
Net volumes of around $1.2 billion are outstanding in credit default swaps insuring Tribune's debt, according to data by the Depository Trust & Clearing Corp.
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