Georgia Gulf loan CDS worth 81.125 pct in auction

NEW YORK, June 10 (Reuters) - Credit default swaps insuring Georgia Gulf Corp's (GGC.N) loans are expected to recover around 81.125 percent, based on the initial results of an auction held on Wednesday to determine the contracts' value, said auction administrators Markit and Creditex.

That means that sellers of protection on the company's loans will need to pay buyers 18.9 percent of the amount of protection sold, or $1.89 million per $10 million of insurance.

Payments on Georgia Gulf's loan CDS were triggered after the company, which makes and markets commodity chemicals, failed to make an interest payment due on some of its debt on April 15.

Credit default swaps are used to insure against nonpaymentof debt or to speculate on a debt issuer's credit quality. (Reporting by Karen Brettell; Editing by James Dalgleish)