fredag 9 mars 2012

ISDA Panel to Meet Today to Decide If Greece Swap Constitutes Credit Event

The International Swaps and Derivatives Association said its determinations committee will meet today to consider a “potential credit event” relating to Greece.

The committee will meet at 1 p.m. Greenwich Mean Time to determine whether a credit event has occurred, according to a statement posted on ISDA’s website today. Greece’s government said it reached its target in the biggest sovereign restructuring in history, with a 95.7 percent participation rate among investors after it received approval to activate collective action clauses.

Bondholders tendered 152 billion euros ($201 billion) of Greek-law bonds, or 85.8 percent, after the government offered to swap their holdings for new securities under the debt exchange. Twenty billion euros of foreign-law bonds were also tendered, according to an e-mailed statement from the Greek Finance Ministry. Greece aimed to cut its 206 billion euros of eligible debt by about 100 billion euros. ISDA said last week that credit-default swaps on Greek bonds hadn’t been triggered by the European Central Bank’s exchange of Greek bonds for new securities exempt from losses taken by private investors. Under ISDA rules the use of collective action clauses should trigger the swaps.

The volume of contracts on Greece has tumbled, with the net amount of debt protected representing less than one percent of the nation’s bonds and loans outstanding. Swaps on Greece now cover $3.16 billion, down from about $5.56 billion a year ago, according to the Depository Trust & Clearing Corp. That compares with contracts covering $22.7 billion of Italian government debt and $22.5 billion of France’s debt.

Word of the Day: Hypothecation, Re-hypothecation and Churning!

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