GM Generali

Generali (AQEU:GM)
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The expected bankruptcy filing by General Motors Corp. (GM) will trigger the settlement of around $3 billion in credit-default swaps written against the auto maker.

The filing is expected Monday, with the resolution committee of the International Swaps and Derivatives Association, which groups the leading credit derivative dealer banks, deciding on a settlement plan that will likely involve an auction in around a month.

The Depositary Trust & Clearing Corp. reported a net notional $2.3 billion in credit protection contracts outstanding on GM as of May 22, involving 4,820 contracts. Another $776 million in protection was held against indexes that included GM.

The number and value of CDS contracts written on GM, which together with its financing arm, GMAC LLC, was once the largest issuer of corporate debt, have fallen significantly in recent years as the auto maker's woes intensified and the derivatives markets moved toward streamlining contracts. GM doesn't figure in the top 10 of outstanding single-name CDS contracts, reflecting the credit crisis and concerns about sovereign creditworthiness.

Financial service companies and sovereign issuers dominate the rankings, according to the DTCC data, led by Italy and General Electric Corp. (GE). Net contracts related to Ford Motor Co. (F) stand at $1.92 billion, with another $5 billion for its finance arm, Ford Motor Credit.

With its common equity expected to be wiped out by a bankruptcy filing, GM shares closed at 75 cents on Friday after slipping below $1 for the first time since 1933. Administration officials have said GM could remain in private hands for up to 18 months while it restructures, entailing its substitution in the benchmark Dow Jones Industrial Index.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com