NEW YORK, Dec 1 (Reuters) - Credit default swaps on the loans of Hawaiian Telecom Communications Inc may be settled in an auction, after the company on Monday filed for bankruptcy protection, the International Swaps and Derivatives Association said.
Hawaiian Telecom had $1.07 billion in long term debt as of Sept. 30.
Credit default swaps are used to protect against the risk of a borrower defaulting on their debt, or to speculate on their credit quality.
When an issuer defaults, protection buyers are paid the full sum insured in return for the default debt, or cash equivalents that are determined by an auction. (Reporting by Karen Brettell; Editing by Leslie Adler) n((firstname.lastname@example.org; +1 646 223 6274; Reuters Messaging: email@example.com ))