Wall Street Journal
March 1, 2012
The devil is in the detail when it comes to defaults. Standard & Poor's has declared Greece to be in a state of "selective default," but the 10 banks and five investors on the International Swaps and Derivatives Associations' Determinations Committee unanimously agreed Thursday that credit-default swaps (CDS) on Greece's debt had not been triggered. That was not a surprise. But unless there is an extraordinarily high voluntary take-up of Greece's bond swap offer, the process will almost certainly end up triggering CDS in the next two weeks or so.
The committee was asked to judge two questions: whether a restructuring credit event had taken place, and whether holders of Greek law bonds had been subordinated by the European Central Bank in a way that would trigger CDS. The ECB has swapped its Greek bonds for new bonds that will not be subject to collective-action clauses that could be used to enforce the restructuring, thus excluding it from losses.
More
No comments:
Post a Comment