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ISDA Unanimous - No Payout On Greek CDS

Tyler Durden's picture




 

As expected by virtually everyone:

  • NO PAYOUT ON GREECE $3.25 BILLION DEFAULT SWAPS, ISDA SAYS

Keep in mind, as criminal as this appears, and as damaging to the CDS market, the real trigger will be what ISDA does determines following the end of the PSI process. If there is no credit event then either, especially when the CACs are triggered as expected - an event which will certifiably be a trigger event under Section 4.7, then ISDA is truly hell bent on blowing up the CDS market as a hedging vehicle in its entirety.

As a reminder, here is the EMEA determinations committee:

EMEA

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

 

As a quick follow up, the bolded hedge fund in the ISDA determination committee is the party that many expect to be the primary hold out in the PSI. There is much more to this story than meets the eye, especially if Elliott voted with the rest of the banks for the unanimous decision.

Full PR:

EMEA Determinations Committee Statement March 1, 2012

In light of today’s EMEA Determinations Committee (EMEA DC) unanimous decisions in respect of the two potential Credit Event questions relating to the Hellenic Republic (DC Issue 2012022401 and DC issue 2012022901), the EMEA DC has agreed to publish the following statement:

The first submitted question (DC Issue 2012022401) asked whether the holders of Greek law bonds had been subordinated to the ECB and certain NCBs whose bonds were acquired by the Hellenic Republic prior to the implementation of new Greek legislation such that such subordination constitutes a Restructuring Credit Event. (The full text of the question is available here http://www.isda.org/dc/view.asp?issuenum=2012022401.)

The EMEA DC unanimously determined that the specific fact pattern referred to in the first submitted question does not satisfy either limb of the definition of Subordination as set out in the ISDA 2003 Credit Derivatives Definitions (the 2003 Definitions) and therefore a Restructuring Credit Event has not occurred under Section 4.7(a) of the 2003 Definitions.

The second submitted question (DC Issue 2012022901) asked whether there had been any agreement between the Hellenic Republic and the holders of private Greek debt which constitutes a Restructuring Credit Event. (The full text of the question is available here http://www.isda.org/dc/view.asp?issuenum=2012022901.)

The EMEA DC determined that it had not received any evidence of an agreement which meets the requirements of Section 4.7(a) of the 2003 Definitions and therefore based on the facts available to it, the EMEA DC unanimously determined that a Restructuring Credit Event has not occurred under Section 4.7(a) of the 2003 Definitions.

The EMEA DC noted, however, that the situation in the Hellenic Republic is still evolving and today’s EMEA DC decisions do not affect the right or ability of market participants to submit further questions to the EMEA DC relating to the Hellenic Republic nor is it an expression of the EMEA DC’s view as to whether a Credit Event could occur at a later date, in each case, as further facts come to light.

 

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Thu, 03/01/2012 - 11:46 | 2212711 Kayman
Kayman's picture

The accused is also the judge.  I don't see any problem at all, Mr. Soprano...

Thu, 03/01/2012 - 10:53 | 2212431 falak pema
falak pema's picture

Ah the Lords of the market are now snake eating tail like in panic play; damned if you do and damned if you don't.

Well, what you sow you reap, and today its the sheeple that pay with their blood. 

Tomorrow, maybe it will be you the TBTF cabal, may you burn like the Templars on l'ile aux Juifs in 1315...

Thu, 03/01/2012 - 11:11 | 2212520 outsidertrader
outsidertrader's picture

Hilarious. Turkeys vote to declare Christmas null and void. What a surprise.

Thu, 03/01/2012 - 11:36 | 2212648 PORTA PORTA
PORTA PORTA's picture

Here is the official ISDA decision ( my underlines ):
http://www.scribd.com/doc/83323984/ISDA-EMEA-Determinations-Committee-DECISION-on-Hellenic-Republic-Restructuring-Credit-Event-March-1-2012-PP

Here is the BOD of DTCC :
http://www.scribd.com/doc/83319216/DTCC-BOD-n-stuff-PP

Here is a very important doc.. on Definicions..-referenced in the decision above- ISDA :
http://www.scribd.com/doc/83323989/ISDA-the-2003-ISDA-Credit-Derivatives-Definitions-PLCF-PP

When they position themselves Strategically on the Geopolitical Map, they wil trigger the CDS’s which should have been triggered since May 2010, when we signed the first Loan Facility agreement.

I assume we doent have any stupid friends among us asking the silly question ” do they have the $, can they afford to pay CDS “?

There are 2 ( two ) RULES to BE FOLLOWED.. simply :
RULE #1 : ” as long as there are TaxPayers arroynd teh world, there is always going to be enough money and paper money”

RULE #2 : ” the system prohibits 200+ “Sovereign” Countries from producing the money they need, and forces them to BORROW the MONEY they need.” ( Central Banks are owned by the same few individuals world wide… )

??????/PP

Thu, 03/01/2012 - 11:50 | 2212663 swani
swani's picture

Yes, this decision will backfire, but the can kicking has been accomplished for the present time. The Federal Reserve TBTF banks and other beneficiaries of free money like GE, need to get their candidates through the election. After Obama or Romney are safely in the WH for another 4 years, the Troika will allow a default of Greece which will 'cause' Bank of America to file for bankruptcy, but before doing so, like MF Global before it, B of A will pay out JP Morgan & Goldman and whoever else is in the club, the credit default swaps for Greece. At this point, "in the light of the Bank of America bankruptcy", the laws governing CDS and other such derivatives will be rewritten by our politicians for 'national security' or some other bogus reason that will be marketed by the mainstream media as 'protective' of the American people, while the American tax payers through the FDIC will be forced to pay out trillions to the Bank of America depositors that will be wiped out by payouts due to JP Morgan & others from the Greek bankruptcy.

And the game will continue unabated under a different name and using other complicated instruments and bloated legislation. While this is going on and the dollar devalued with every bail out of the TBTF banks, when the LTRO comes due in 3 years time, much of the gold belonging to insolvent European nations, like Italy, will fall into the hands of the Federal Reserve Banks, so when the dollar is eventually rendered valueless from all of the printing, the usual suspects will be more than ready to back another currency when it comes time, remaining forever in control of the world's money supply.  

What is anyone going to do about this, even as it comes true before everyone's very eyes? Looks like nothing to me.    

 

 

Thu, 03/01/2012 - 11:55 | 2212748 Kayman
Kayman's picture

swani

Excellent theory.  Assuming Ben can continue to monetize the debt up until November.

Thu, 03/01/2012 - 12:51 | 2213001 swani
swani's picture

@Kayman 

Well, we know that Ben has a lot of tricks up his sleeve, discount windows, ext, ext, and with the City of London as a preferred Ponzi partner being allowed by law to re-hypothecate 'collateral' into infinity, well, with that in mind, monetizing debt until November will be a piece of cake. Just think of what Madoff would have done if he could have taken new money and re-hypothecated it into infinity to pay back redemptions, he'd still be in business. 

The Greeks & Italians may revolt, but we know that L-Pap and Three Card Monte will be in a bomb shelter somewhere signing away the rights of all citizens to the wealth of their respective treasuries to pay off the TBTF banks. 

 

 

Thu, 03/01/2012 - 11:38 | 2212667 PORTA PORTA
PORTA PORTA's picture

Also check out this doc ..!! its a must

 

http://www.scribd.com/doc/83307640/Isda-Pai-for-Issue-No-2012022401-PP

 

PP

Thu, 03/01/2012 - 11:39 | 2212668 Dingleberry
Dingleberry's picture

MF Global.....now this shit. Someone tell me again why anyone plays these markets that is not an insider?

Thu, 03/01/2012 - 15:22 | 2213722 Imminent Collapse
Imminent Collapse's picture

I have been reading ZH for awhile and I am always surprised that things haven't collapsed yet.  This is why people have a normalcy bias.  People who predict collapse that doesn't happen appear to be wackos.  The evidence is in, but the game continues. 

Such a life on such a planet!  (Urantia Book)

Thu, 03/01/2012 - 17:48 | 2214700 Fíréan
Fíréan's picture

Here's a link to a simplified laymen's explanation from one Felix Salmon at Reuters.

http://blogs.reuters.com/felix-salmon/2012/02/29/how-greeces-default-cou...

 

I'm not sure why some people  are so against the CDS market when it's used properly (lack of knowledge and understanding ? ) but do understand, and agree with,  the critics of the destructive nature of naked CDS.Betting on the collapse of an asset , or bond which one does not hold.

 

 

 

 

 

 

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