HLI Operating loan CDS valued at 9.5 cents in auction

NEW YORK, June 9 (Reuters) - Credit default swaps (CDS) insuring the loans of HLI Operating Co, a subsidiary of Hayes Lemmerz International Inc (HAYZQ.PK: Quote, Profile, Research), recovered 9.5 cents on the dollar on Tuesday in an auction held to determine the value of the contracts, said auction administrators Markit and Creditex.

That means that sellers of protection on the company's loans will need to pay buyers 90.5 percent of the amount of protection sold, or $9.05 million per $10 million of insurance.

Payments on HLI's loan CDS were triggered after auto parts maker Hayes Lemmerz filed for bankruptcy protection on May 11.

Credit default swaps are used to insure against nonpayment of debt or to speculate on a debt issuer's credit quality. (Reporting by Karen Brettell; editing by Jeffrey Benkoe)