Aleris International loan CDS worth 8 pct in auction

NEW YORK, March 9 (Reuters) - Credit default swaps insuring loans of bankrupt Aleris International Inc, a maker of aluminum products, were found to be worth 8 percent of the amount of debt insured in an auction on Monday, according to results published by administrators Creditex and Markit. That means that sellers of protection will need to pay out 92 percent the loans they insured, or $9.2 million per $10 million of insurance sold. Credit default swaps are used to insure against a borrower defaulting on their debt. Payments on the contracts were triggered after Aleris filed for bankruptcy last month, hurt by declining demand for aluminum products. Private equity firm TPG TPG.UL bought Aleris in 2006 for about $1.7 billion plus the assumption of around $1.6 billion in debt.