Tribune CDS recover 1.5 percent in auction

NEW YORK (Reuters) - Sellers of protection on Tribune Co’s bonds are facing losses of 98.5 percent of the insurance they sold, based on the results of an auction on Tuesday to determine the value of the bankrupt company’s credit default swaps.

The auction determined swaps on Tribune’s bonds are worth 1.5 cents on the dollar, said auction administrators Creditex and Markit.

Credit default swaps insuring Tribune’s loans recovered 23.75 percent, meaning protection sellers are facing losses of 76.25 percent the amount of insurance they sold.

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.

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.

Tribune’s 5.25 percent bonds due 2015 dropped 2.3 cents on Tuesday to 2.5 cents on the dollar, according to MarketAxess.

Reporting by Karen Brettell; Editing by Leslie Adler