ISDA CDS Trigger Decision Is Unanimous

EMEA DC Statement

March 9, 2012

In light of today’s EMEA Determinations Committee (the EMEA DC) unanimous decision in respect of the potential Credit Event question relating to The Hellenic Republic (DC Issue 2012030901), the EMEA DC has agreed to publish the following statement:

The EMEA DC resolved that a Restructuring Credit Event has occurred under Section 4.7 of the ISDA 2003 Credit Derivatives Definitions (as amended by the July 2009 Supplement) (the 2003 Definitions) following the exercise by The Hellenic Republic of collective action clauses to amend the terms of Greek law governed bonds issued by The Hellenic Republic (the Affected Bonds) such that the right of all holders of the Affected Bonds to receive payments has been reduced.

The EMEA DC has resolved to hold an auction with respect to the settlement of standard credit default swaps for which The Hellenic Republic is the reference entity. To maximise the range of obligations that market participants may deliver in settlement of any such credit default swaps, the EMEA DC  has agreed to run an expedited auction process such that the auction itself will take place on March 19, 2012. In light of this expedited auction process, market participants should submit any obligations that they would like to include on the list of deliverable obligations to ISDA as soon as possible.

Full determination:

Comments

[DraginDickHedge]

http://www.newyorkfed.org/research/staff_reports/sr372.pdf

From this 2009 analysis by the NY FED as to the efficiency of CDS auctions vs. physical settlement for ISDA declared default events (including Lehman), it appears that by using two step auction for price discovery, the CSD sellers win and buyers are forced to settle for value/price of bond on the date of default/auction which is "significantly less" than the face value. How is this "insurance"?  It seems like a "forced hair cut" but I am the first to admit that I can't wrap my mind around the potential consequences which may cascade from this auction of this relatively tiny bond issuance.  Will price discovery effect accounting or force mark to market of soverign assets or other assets?  Sorry if my ???'s are clueless...the article is worthwhile though. 

[nah]

the fact that insurance is for sale on other peoples money just re-enforces the fact that irresponsibility is and will be rewarded

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in the short term for profit

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in the long term

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who decides this shit is legal

[nah]

fucking cops

[blindman]

http://www.youtube.com/watch?v=mvjWbQDm02c&feature=related
Ry Cooder and David Lindley - The Very Thing That Makes You Rich (Makes Me Poor)