Court rules against BofA Merrill in CDS dispute, says Reuters

Reuters reports that the New York State appeals court has ruled that Bank of America does need to make a credit event payment to a hedge fund over the default of Japanese property company Urban. The bank had argued that protection buyer DKR Soundshore Oasis Holding Fund’s credit event notification to protection seller Merrill Lynch was inadequate and that it did not need to settle the JPY1.5 billion ($18 million) credit default swaps, according to Reuters. However, the appeals court overturned a lower court ruling in Bank of America’s favour and said that the credit event notice needed to be only reasonably precise in detail so long as it could be shown that a credit event had in fact occurred, according to the article.

Urban Corporation filed for bankrupty in August 2008 with debts of around JPY250 billion.