Trade Group Rules Holders of RadioShack (RSH) CDS Contracts Won't Receive Payouts

RadioShack (NYSE: RSH) is lower Monday following reports late last Friday that one trade group doesn't expect to pay those that invested in contracts aimed at protecting against loses on RadioShack debt.

The WSJ noted that the International Swaps and Derivatives Association (ISDA) said sellers of insurance like contracts geared toward protecting against RadioShack default won't have to pay based on events that took place the prior week.

The ISDA proposal was unanimously voted through by its 15-member panel. The proposal said that a credit event hasn't occurred in relation to a defult inquiry raised by a RadioShack holder earlier this month. On the basis of the publicly available information submitted, the [committee] resolved that [RadioShack] has not failed to make, when and where due, payments, the ISDA said.

Swap levels indicate a 97.38 percent chance of RadioShack defaulting over the next five years, or 84 percent chance within the next six months.

Shares of RadioShack are down 8.7 percent.

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