ISDA Says 50% Greek Bond Haircut "Appears" Voluntary
Well, they are right: 50% and the gun next to your head does not go off, hence "voluntary" or push for fair treatment in bankruptcy, get exiled from the ponzi in perpetuity, and hope for a 0% recovery at best. Next steps: the upcoming 90% haircut, which make no mistake is coming once the 50% one is deemed insufficient, just like the 21% before it, will also be voluntary? Thank you ISDA for confirming whose interests you have truly at heart, and for forcing everyone to take a quick peek at the members on your "determinations committee."
From ISDA (highlights ours):
NEWS RELEASE
For Immediate Release
ISDA Statement on CDS Credit Event Process
NEW YORK, Monday, October 31, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) today issued the following statement in order to ensure an accurate understanding of how credit events are determined for credit default swaps contracts. Today’s statement is intended to underscore key points articulated in the Greek Sovereign Debt Q&A, updated on October 31, which discussed this issue with regards to the Eurozone proposal for Greek debt. Some media accounts of the information contained in the Q&A inaccurately described the credit event process.
The determination of whether a credit event occurs under CDS documentation is made by the relevant ISDA Determinations Committee (DC), which consists of 10 sell-side and five buy-side firms. ISDA serves as secretary to, but does not sit on, the DC. A supermajority of votes (12 of 15 DC members) is required to find that a credit event has occurred without the decision being subject to external legal review. A weaker majority decision would be subject to external legal review that might overturn such a determination.
The DC’s review of a potential credit event comes after a proposal has been announced and its final terms are publicly available and only if a market participant requests the DC to take up the matter. Neither of these has yet occurred with regards to the Greek sovereign debt situation. No debt issued by the Hellenic Republic has been modified to date, nor have the formal terms for any such modification under the Eurozone proposal yet been released. No market participant has yet made such a request to the DC.
When the DC does review a situation to determine whether a credit event has occurred, it does so using publicly available information and according to the terms of the ISDA Credit Derivatives Definitions. The Definitions specify that for a credit event to occur, a restructuring must be binding on all holders of a particular bond or loan.
Based on what we know now, it appears from news reports that the Eurozone proposal involves a voluntary exchange that would not be binding on all holders. As such, it does not appear to be likely that the Eurozone proposal will trigger payments under existing CDS contracts. However, whether or not it does so will be decided by the DC on the basis of the specific facts, if a request is made to them.
More information on the credit event process and the ISDA Determinations Committee is available in the Greek Sovereign Debt Q&A at on the ISDA website and on the Determinations Committee section of ISDA’s website at http://www2.isda.org/determinations-committees/.
For More Information, Please Contact:
Lauren Dobbs, ISDA New York, +1 212 901 6019, ldobbs@isda.org
Rose Millburn, ISDA London, +44 203 088 3526, rmillburn@isda.org
Donna Chan, ISDA Hong Kong, +852 2200 5906, dchan@isda.org
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Semantics it 'appears'
I don't there has been a successful example of self-policing in recent human history (2000 years or so).
The Determinants are a joke. The world of busyness is mad. This contextual advertising is driving me nuts too. I know Hobby King sells the Stable Sor Air or the other for $65.97.
Everything is currently tending to swing too far on the wrong side. We will make a brief halt at the top of the swing though, all too ephemeral, eye of a fast travelling storm...
ISDA. Institute of Self Determined Asshats.
ORI
Awesome Art
Bondholders take "voluntary" circumcision.
Repeat after me: This is not a credit event. This is NOT a credit event!!
(I dunno what would a credit event would be)
Isn't the better analogy "50% haircut or I commit suicide"?
10 sellside firms vs 5 buyside firrms? Who the fuck would sign up for that?
The #OWS cretins are claiming that the NYPD is dropping drunks off in Zuccotti Park to cause trouble.
These moroms can't tell their the angry drunks from their fellow morons.
They need to clean that park out NOW.
Corzine?
Clueless, Not,
Greens for you. Ha ha!
There have also been reports that Goldman Sachs is parachutting in scores of gender studies majors, street puppets and dirty hippies in an attempt to make OWS look like a bunch of shiftless and disorganized weirdos.
If they dropped a large bag of FRNs right in the middle we would see if this OWS demands are for real. It would be a truly enjoyable moment and would cost GS lunch money at best.
It "appears" that my dick is 24 inches long.
Oh hell, that's the ruler I use for fishing.
why? worried about something?
Clueless, I see you have spread your cheeks and inserted your head again. Are you the resident Cro-Magnon here at ZH?
A bona fide mess. No way this will get through in the end without violence. And violence generally ain't exactly semantics.
If you're managing a fixed income portfolio at a big bank, and you held Italian, Spanish, Irish, or Portguese Debt, wouldn't you be SELLING since CDS is completely useless.
http://gainesvillecoins.com
It sure is, our Western banking system is becoming a joke pure and simple. When you don't like how the game is being played against you, change the rules. You know things are bad when this happens.
Voluntold !
So someone make a request already!
Back to work you lazy slaves!
So.....sovereign CDS still trades because....?
For show.
Looks to me like ISDA is covering their own asses in case shit hits the fan. Wiping shit off your face dont mean you are now clean, especially when flies starts buzzing around you and no one wants to get near you because of the wreakness you possess.
And for sure, ISDA will be releasing many many more statements like this going forward.
Well, when things don't go well for Bankers, they get someone to change the accounting to keep them afloat. (check).
Then they influence the regulatory body (this is only a pretend one) to make preverse decisions to further their misdeeds. (check)
And when that doesn't work they go to the public and politicians, who depend on these morons for poly-contributions to vote them money (check)
And then the steal money from their clients and move it offshore in a way that is difficult to track. (Check).
Then, if they are small enough the go belly up. But if they are big enough and too well connected, then the Central Bank bails them out with funny money. (check) [Apparently MF Global is not too big to fail].
Time to make your voice heard. This is total crap.
If you don’t take the deal then your CDS is ok. If you do take the “voluntary” deal then you’re out of luck…As an aside, you don’t need to sit and wait for a credit event on a CDS you can get out and take your gains.
Same reason title and mortgage insurance still sell. Sabe dios.
This would appear good enough to cause the obligatory afternoon ramp up.
Shove the 50% 'voluntary' hair-cut... and collect 100% on the CDS. THAT'S WHAT IT'S FOR! If you didn't purchase it for circumstances like these, then what did you purchase it for!?
Obviously to enhance the profitability of those firms sitting on the ISDA Determination Committee. It does appear to a commoner like me that a Best Buy extended warranty may provide more value than CDS contracts on Sovereign Debt.
In other words, the patient isn't dead until they determine it is.
A rotting stinking corpse doesn't matter.
Just the agreement, and then it is subject to argument.
I think a 50% "haircut" is an event fellas.
ISDA: Female anal porn "appears" voluntary
The way those bond holders were flaunting their CDS, they were just asking for a 50% haircut.
The eurozone governors wish to eliminate CDS trading on sovereigns. The amazing thing is that the ISDA spokespeople appear to be going along with that wish, willing to throw away the entire sovereign CDS market. We know Trichet threatened to allow a 100% default if IIF didn't accept a 50% default. It is exactly as if a rapist with a 9mm pistol said to a woman "Agree to take off your clothes and have sex with me voluntarily, or I'll shoot you." As for insisting on the haircut ONLY for private holders, I can only call that criminal, the sovereigns of Europe expropriating the wealth of the pension funds and insurance companies. Suppose the USA made that offer on US T's. Think about it.
Bankers extort governments; governments extort bankers. I think the governments are getting the short end of this deal!
Is there such thing as a honest Greek taxpayer. It seems everybody and his cousin Vinny (still dead since late 80's) are on the take there. 8 billion dollars worth of pension frauds. One huge crooked and corrupted cesspit.
There's no such thing as an honest tax, therefore your question is moot.
Every "country" has been infected with a fatal flaw. With Greece, it's Taxes. With India it's corruption. WIth Germany it's fastidiousness. With America is Manifest Destiny/Jingoism. With England it's Alcohol/Football.
Cesspits all.
ORI
ORI, some places are worse than others, trust me on this one. Ever been to Pakistan? I would like to hear your observations of THAT country.
Never been DCRB, only heard First HAnd experiences. Truth is, in most ways except dominan religion, we are the same and similarly conditioned by the brisith.
I think I'd feel right at home in Pakistan. :-)
ORI
PS: It's really bad here in India. Prevelant, dominant, leech on the system. Egrigious too.
That's too bad ORI about India being so bad.
Look around on some of the other threads to see my comments on Jon Corzine!
Sounds like he would fit right in with your local kleptocracy!
edited for bad taste
I think according to Greek law, even the recipients of the Greek pension funds that received the 50% haircut as well do not have a legal right to protest the haircut.
I'm assuming you are in USA.
Do you really still believe that the USA is in any better shape behind the statusquo curtain?
I know. I still don't want to believe...even though it is right in front of me....but that is just the MSM programmed debt monkey on my shoulder. He's a lying fuck.
Go long litigation - ISDA won't have the last word by a long shot
the world will be broke long before litigation gets anything resolved.
It is basic human nature to want 50 cents on every dollar you invest. That is why so many people literally line up for such deals without being forced.
Everything they teach you in business school is wrong.
And this does go to show what hyper bullshit those ISDA contracts and riders are.
What kills me is that people actually threw/throw down for a CDS contract that says something like :
The determination of whether a credit event occurs under CDS documentation is made by the relevant ISDA Determinations Committee (DC), which consists of 10 sell-side and five buy-side firms. ISDA serves as secretary to, but does not sit on, the DC. A supermajority of votes (12 of 15 DC members) is required to find that a credit event has occurred without the decision being subject to external legal review. A weaker majority decision would be subject to external legal review that might overturn such a determination.
That would be like holding Kardashian virginity insurance which only pays when her lawyer acknowledges that an "event" has transpired.
What I struggle to understand here is why the resistance to calling this a triggering event. My understanding is that the net notional Greek referencing CDS exposure is $3.75b. Not a big deal. Are they working this hard to avoiding calling this a *default* for precedential value because of the high likelihood that this sequence will repeat itself on a much bigger stage (i.e. Italy and beyond)?
me thinks yes.
http://www.youtube.com/watch?v=vDy2xWpZWVc&feature=related
'My understanding is that the net notional Greek referencing CDS exposure is $3.75b. Not a big deal'
You can bet (heh) that that $3.75 beelyun CDS exposure has leverage times pi. The greek CDS is held by the major European banks. In turn, the rest of the world is exposed to them. As widely known, the banking sector is one big house of cards.
It may not be a stick of dynamite (Lehman), but I think you would pay very close attention if someone lit that bottlerocket (Greek CDS) superglued to your scrotum.
Yes, as I understand, those who sold the CDS sold coverage on many times the notional value. That is how BoA wound up with $75 trillion of underlying derivative value that moved into the bank to use demand deposit accounts as collateral. There are not enough assets in the entire world to support the coverage that was written.
This is like an insurance company refusing to pay on a car accident because you "volunteered" to be in the car when the accident happened.
So.... if your risk hedges don't hedge risks, risk off?
I was thinking along these lines, that after paying for decades of life insurance, your widow may not be paid because you voluntarily ate too many cheeseburgers..
What about these CDS's being considered fraudualant contracts? If 50% haircuts won't trigger it did you really sell something or they just inducements of fraud? When do the holders start creaming? Lastly, I wonder if the NY AG will take any action?
Well, if it's voluntary then why not respectfully decline:
"No thank you!"
'Cuz then they won't be invited to the party on the most recent "private" Greek island with ice sculptures pissing vodka and little 8-year-old boys running around naked "just asking for it....."
Dude. Yuck.
Well, with a list of criminals like that one, who needs the rule of law? Just make it up as you go, and make sure your interests top the list...including the interests of...HUMANITY!
Capital will not form in banks as corrupt as those on this list, and so the Greater American Depression will only roll on.
~"Capital will not form in banks..."~
And it's not. Many are figuring out that banks, (save for maybe some credit unions), are not the "best" place for one's capital. Personally I choose a Ruger Alaskan to sit next to mine. Banks aren't the only folks with safes.
What a joke.
Time to enforce some "voluntary" haicuts around the world. Paper pushing fucknuts burning down the world, got physical?
Committee components are absurd. Makes a mockery of the concept. And why do they even bother to delineate by region. Only the consulting members seem to change.
Thai floods, very bullish for the japanese economy...
http://www.nationmultimedia.com/new/2011/10/18/business/images/30167951-...
Haircuts will continue until morale improves!
Problem: Eurozone is in tatters, spreads blowing out.
Solution: Buy RATE and "Stamps.com"
LOL.....
No. Buy silver gulden, lira, escudos, schillings.
"It depdends on what the definition of 'is' is." - Slick Willie.
50% is not voluntary, it is being imposed, ergo it's not voluntary. The only reason some morons are accepting it is that they believe they will at least get their money back on 1 yr GGB's.
ISDA speak with forked tounge!
Great job Tyler. Good digging. That's why we come here.
+++++
What is going to happen, if say 70% of creditors will take the voluntary haircut, and 40% will resist? Is it default for all, or is it on per case basis?
70+40...you must be one of those algo machine designers at Wall Street? :)
Oooops - I got caught doing terrible math. I stand corrected 70-30. My apologies to all victims that were hurt. Funny - I have a degree in Mathematics - who knew?
institution, please?
I'm a mathematician not an arithmetician.
Soooo if I understand correctly the sane are in the asylum and the insane are on the street
Appearances have been known to be deceiving
Unintended consequence: investors in eurozone sovereign debt require better yields since unclear if CDS will work as a hedge.
Well yes.
But why would anyone buy any CDS at all.
If the Determination Committee can determine that you voluntarily agreed not to collect.
All yields should rise in the medium term.
It is irrelevant as they will get a very low particiaption rate at 50%....... Why take 50% when you can wait and trigger the insurance when default occurs....... Vampire Squid have figured this out, and so should Zerohedge readers......
Did MF have EZ sov CDS on their books? Or was their position in Italian short-terms completely unhedged?
Who has to pay if an event is triggered? Who sold all these CDS's?
The Determination Committee?
WINNING!!!
Is it me or wount the DC just vote in favour of how their own trading book is structuered and then just argue the toss with whoever disagrees?
'Haircut' DECAPITATION is more fitting.
50% decapitation, laff. What's that, some of your neck is still attached?
When is the cage match? Put all these folks in the ring, give them scissors, make them run, and we may just have a partial solution to removing the embarrasing ring around the tub. The winner will be allowed to stay in the tub as it is sent out to sea from Sendai, anchored a few miles off shore, and nature will do the rest.
Cha....When I blew my lunch after reading the headline....that APPEARED voluntary also.....
Like the firing squad said to the guy tied to the pole in front of them just after they raised their guns:
IF YOU THINK THIS IS A BAD IDEA, RAISE YOU HAND!
1, 2, 3!
[Fade to black. Close Act 2 Scene 3]
The show will go on after these words from our sponsors....
better wait for those sponsors cheque's to clear.