ISDA Finds An Event Of Default At Eastman Kodak, Whose Bonds Are Trading 27% Higher Than Greece

ISDA, in which the I stands for Irrelevant or other even less flattering adjectives, has just released the following press release:

NEW YORK, January 19, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its Americas Credit Derivatives Determinations Committee resolved that a Bankruptcy Credit Event occurred in respect of Eastman Kodak Company.

The Committee determined that an auction will be held in respect of outstanding CDS transactions. ISDA will publish further information regarding the auction on its website, www.isda.org/credit, in due course.

Which is great: apparently the default of Kodak will not lead to the end of the financial system as we know it. But we have a simple question: we would love if someone at ISDA would get back to us with the answer to the following rhetorical question: which of these two charts belongs to a benchmark Eastman Kodak 2 year bond, and which to  a 2 year Greek bonds, which apparently, ISDA will never find in default. And also, why is the one found to be in a credit event trading 6 cents higher than the non-credit event one.

P.S. here is the answer for what would happen if one bought GGBs and Sold EK bonds: a loss of nearly 7 absolute cents in cash.

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Comments

[prains]

Hahahahahahahahahahahahahahahahahah fucking ha

[navy62802]

http://www.youtube.com/watch?v=EuElJTDR5QM&feature=related

[gmrpeabody]

+1 to Tyler(s)!

[ZackLo]

I think my funny bone is broken....Welcome to wonderland alice..

[ACP]

Not surprised really, but still funny.

[Cult_of_Reason]

Now PSI deal is "by Monday", not "by Friday" anymore.

Full PSI deal to come by Monday http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_13139_19/01/2012_42...

[Vampyroteuthis ...]

PSI is a never. You ever going to think those bond holders who bought CDS at a good price is going to let this jackpot get away? When hell freezes over maybe.

[Buck Johnson]

I totally agree with you.  What financial institution that is public (shareholders) and private would voluntarily take a deal when they have insurance that will make them whole.  Greek is throwing that comment around that the govt. will change the law and make all of them accept whatever deal, but that would be a credit event.  I think they are trying their hardest to brow beat and cajole all of them to think that if Greece changes the underlying rules to the bonds they have no choice. 

They are wanting it to happen because not only the CDS insurance, but the ISDA.  If the ISDA doesn't call this as a credit event but they have called other things bonds as events with a better look to them, it calls into question the ISDA.  They set themselves up in a catch 22, they don't call it then any bond that is in the same situation can't be called a situation.  And any bond in a better situation regardless of bankruptcy (Kodak) won't be considered a Credit event.  They ISDA are screaming at the EU and possibly the US to make this happen, because if the legitimacy of the ISDA is called into question who can trust what has been called by this party.  Even the events called by ISDA in the past could put them in litigation from hundreds of institutions and groups and even countries.  They wouldn't be able to call anything a credit event anymore. 

So in order to save the insurance companies who have no money to pay these CDS, they have sacrifice an institution which will buy them time but put the whole mess back into a worse position in the summer when all bonds are suspect.  If I was the EU, I would tell the US (who's insurance companies and banks issued almost all the CDS contracts) that if they don't help to stave this with money and backing they will allow this to default.  And to be honest they can't stop it.

[o2sd]

CDS isn't the only thing regulated by ISDA agreements. If a contract cannot be enforced according to the ISDA agreement, well:

• There goes ISDA netting agreements, so net credit exposures become gross credit exposures, nearly doubling economic capital requirements for the world's banks.
• There goes ISDA collateral agreements, so no more collateral mitigation of credit exposures. Back to un-collateralised credit limits.
• There goes equity repos, because the beneficial owner of the equity does not change for the duration of the repo, the only way to enforce it is through the ISDA agreement.

If ISDA goes, then the world's credit markets will be thrown into chaos. I'm pretty sure that the world's banks, on balance, would rather take a Greek haircut than lose the agreements that hold the world's credit markets together. Buy hey, the stupidity of the current generation of leaders never ceases to surprise, so maybe they really will shoot themselves in the foot while it is in their mouth.

Gud Taims!

[redpill]

OT: Obama is now officially giving speeches from Fantasyland...literally!  Can't make this shit up...

[donsluck]

Obama is an incredible force for the Republicans. He pays lip service to Democrat ideals, then cuts them off at the knees. It's ironic how he touts the value of tourism while executing the war on tourism...er...terrorism.

[redpill]

He even manages to piss off the Canadians, which really isn't that easy to do!

[sabra1]

it's a fact he's got millions of dollars stashed at the royal bank of canada! no joke! 

[prains]

he does piss off Canadians but Steven Harper gushes over Obama like a school girl, says a lot about the PM (precious mort)

[rehypothecator]

Ahhh, it's good to be sovereign. 

[hedgeless_horseman]

This is just fucking sad.

So we can put some names to this grift, and maybe take a wild guess who sold Greek CDS...

http://www.isda.org/credit/

EMEA

Voting Dealers
Bank of America / Merrill Lynch
Barclays
BNP Paribas
Credit Suisse
Deutsche Bank
Goldman Sachs
JPMorgan Chase Bank, N.A.
Morgan Stanley
Société Générale
UBS

Consultative Dealers
Citibank
The Royal Bank of Scotland

Voting Non-dealers
BlueMountain Capital (Second Term Non-dealer)
Citadel LLC(First Term Non-dealer)
D.E. Shaw Group (First Term Non-dealer)
Elliott Management Corporation (Third Term Non-dealer)
Pacific Investment Management Co., LLC (Second Term Non-dealer)

...so allow me to be plain.  If you buy this crap from any of the above companies you absolutely deserve to lose all your money. 

[disabledvet]

That's easy! The one that's not a credit event currently works for the CIA whereas the one that is a credit event only used to! What's ya got for a bonus question?!

[Schmuck Raker]

The LORDS of Finance work in mysterious ways.

[valley chick]

well done Tyler.  :-D

[LawsofPhysics]

Enjoyed that Tyler, bloody brilliant.

[Gubbmint Cheese]

ISDA - or, The Institute of sporatic default assignments

[Elwood P Suggins]

Incompetent Scalawags and Devious Assholes, Inc

[Reese Bobby]

I Serve Dimon, Asshat

[Misean]

"why is the one found to be in a credit event trading 6 cents higher than the non-credit event one."

Because you don't have a PHuckeD in Ebubblegnomics! DUH!

[Real Estate Geek]

. . . from a school with a decent program, of course!

[Frank N. Beans]

Kodachrome, bitchez. 

[Raisuli]

I do not know what y'all know or think you know about how silver halide based image capture is manifested to the end supplier/user. Kodak seemed to be built on that. Agfa, Fuji, and 3M got onto it.

In my experience, silver halide based images are now only an entry in a wiki somewhere.

Disclosure: I work in the photo industry.

[mayhem_korner]

The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its Americas Credit Derivatives Determinations Committee resolved that a Bankruptcy Credit Event occurred in respect of Eastman Kodak Company.

Anyone else picturing TreeBeard saying 'we have decided....that you are not orcs"...?

Mr. Owl, how many committees are there under the ISDA umbrella?  The world may never know.

[YesWeKahn]

I Shit Da Asx.

[Squid-puppets a...]

so is this kodak default a freeze-frame moment, or an Ice-9 ?

[mayhem_korner]

Neighbor of mine used to rob me blind of my best baseball cards in a game called "flip" or "tops" depending on where yer from.  He'd play with the peeled-off blanks of superman sticker cards and the carboard inserts from packs of Twinkies, while I'd be tossing Brooks Robinson and Willie Stargell rookie cards against the wall.

For some reason, this feels like that.  

[pakled]

Ride 'em Team Tyler! Ride 'em!!

And don't stop. Who loves you baby?

[847328_3527]

poor Kodak...not a bank...not even a car dealership so they let them blow in the wind and fail.....

[sabra1]

so, where will i be able to buy more film for my digital camera? anybody? 

[Zgangsta]

Try Polaroid.

[Reese Bobby]

That's not funny.

-Mayor Richards, Rochester, New York

[Catullus]

But but but but, i was scaremongered into believing that the Credit Default Swaps derivatives bomb would destroy the entire financial system and all of humanity would be plunged into a new Dark Age. What do you mean the markets will clear and life will go on?  Thank Jesus they didn't let an investment bank see this fate! What would I do if Goldman Sachs didn't exist?

[i-dog]

 
   "What would I do if Goldman Sachs didn't exist?"

That one's too easy ... you'd need to volunteer as a sock puppet for somebody else?

[847328_3527]

Who owns Kodak:

http://finance.yahoo.com/q/mh?s=EK+Major+Holders

[Quinvarius]

Well. They just filed for BK.

[i-dog]

 
   "we have a simply question"

What's with "simply", instead of "simple", cropping up everywhere here in the past few days? This is at least the 4th time I've seen it appearing, though only the first time from Tyler (I think).

Is there some new dialect emerging of which I've been kept out of the loop?!

[covert]

there is a sucker born every minute.
http://expose2.wordpress.com