NEW YORK - Sellers of protection on the loans of Metro-Goldwyn-Mayer are facing losses of 41.5 percent, based on the results of an auction used to determine the value of the bankrupt company's credit default swaps.

CDSs on MGM's loans are worth 58.5 cents on the dollar, based on the auction held on Tuesday by administrators Creditex and Markit. That means protection sellers will need to pay out $4.15 million per $10 million of insurance they sold.

CDSs are used to insure against a borrower defaulting on their debt or to speculate on their credit quality.

Payments on the contracts were triggered after MGM, home to a renowned film library including the James Bond movies, failed to make a payment due on its loan on Sept. 30.

MGM has a forbearance agreement with its lenders, which expires on Dec. 15, which exempts it from interest payments as it negotiates with lenders to develop a new capital structure and support a long-term business plan.

The failure to make interest payments nonetheless triggered payments on its CDSs.

The company was taken private in a $2.85 billion buyout in 2005 by a group including private equity firms Providence Equity Partners, TPG, DLJ Merchant Banking Partners, a unit of Credit Suisse, and Quadrangle Group, in addition to media companies Sony Corp and Comcast Corp.

(Reporting by Karen Brettell; Editing by Diane Craft)