LONDON Oct 27 A new voluntary deal for holders
of Greek debt to accept deeper losses is unlikely to trigger a
'credit event' that would cause a payout on default insurance,
said a top lawyer at the International Swaps and Derivatives
Greek bondholders face losses of 50 percent under a plan to
lower the country's debt burden and contain the euro zone's
long-running debt crisis. The aim is to complete negotiations on
the package by the end of the year.
But because participation in the deal is voluntary rather
than forced, it would typically not trigger payment on CDS
"As far we can see it's still a voluntary arrangement and
therefore we are in the same position as we were with the 21
percent when that was agreed," said David Geen, general counsel
at derivatives body ISDA, referring to an original deal proposed
in July that involved smaller bondholder losses.
"The percentage (of losses), as far as the analysis for CDS
purposes goes, doesn't change things. typically a voluntary
arrangement won't trigger the CDS."
Geen said the final decision on whether a credit event has
occurred rested with the ISDA determinations committee, which
would consider the issue when requested to do so by a CDS market
For more on the ISDA determinations committee, see here:
Latest data shows a net total of $3.67 billion outstanding
in Greek CDS contracts. For a factbox on euro zone sovereign CDS