Greek Accord Won’t Trigger Credit-Default Swaps, ISDA Rules Say

ACCORDING TO THIS ARTICLE THE GREEK AGREEMENT IS GOING TO LAST ONLY A FEW DAYS .... as usual the saga goes on and on !!


By John Glover
Oct. 27 (Bloomberg) -- The European Union’s agreement with banks for a voluntary 50 percent writedown on their Greek bond holdings means $3.7 billion of debt-insurance contracts won’t be triggered, according to the International Swaps & Derivatives Association.

ISDA will decide if the credit-default swaps should pay out depending on whether it judges losses to be voluntary or compulsory. European leaders said in today’s agreement they “invite Greece, private investors and all parties concerned to develop a voluntary bond exchange” into new debt.

A last minute agreement was reached after banks, the biggest private holders of Greece’s government bonds, were threatened with a costly full default, according to Luxembourg Prime Minister Jean-Claude Juncker. The involvement of the Institute of International Finance, which represents lenders, also helped progress toward an accord that the EU could portray as non-mandatory.

“As long as the agreement is voluntary, then CDS aren’t triggered,” said Cagdas Aksu, an analyst at Barclays Capital in London. “Provided it’s voluntary, CDS wouldn’t be triggered unless the Greeks missed a payment.”

READ MORE HERE.....................http://www.businessweek.com/news/2011-10-27/greek-accord-won-t-trigger-credit-default-swaps-isda-rules-say.html