Auction sets Landsbanki senior CDS payout at 98.8%

LONDON, Nov 4 (Reuters) - Sellers of protection on Icelandic bank Landsbanki LAIS.IC will have to pay out 98.75 percent of the senior debt they agreed to cover after an auction on Tuesday set the value of the credit default swaps.

The final value of the contracts will be 1.25 percent, according to results published by auction administrators Creditex and Markit.

The outcome is lower than indicated by Landsbanki's underlying bond prices, which were bid at 2 cents on the euro and offered at 6 cents on Monday.

The Depository Trust & Clearing Corp. has calculated gross notional value of outstanding Landsbanki CDS contracts at $19.2 billion and the net value at $1.8 billion after taking into account offsetting positions.

(Reporting by Martina Fuchs and Farah Master)