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Greece Default Is Official; Insurance Payouts Triggered

Posted By admin On March 9, 2012 @ 2:28 pm In Money Watch | Comments Disabled

CNBC [1]
Friday, March 9, 2012

A group representing dealers in credit default swaps decided Friday that Greek’s bond swap constitutes a “credit event” that entitles holders of Greek credit default swaps to compensation.

The “yes” vote by the International Swaps and Derivatives Association triggers roughly $3.2 billion in CDS, which are insurance policies that pay out if a bond issuer defaults. That amount is actually much smaller than many had feared.

The decision was widely expected, and stocks were slightly down after the announcement.

Greece pushed through a bond swap deal on Friday, forcing bond holders to take a significant “haircut” on the return of their money. The swap was approved by about 84 percent of the holders, and Greece is moving to activate a rule forcing the rest of the bondholders to go along with the deal.

Full story here.

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URLs in this post:

[1] CNBC: http://www.cnbc.com/id/46683364

[2] Naked Credit Default Swaps Are “Like Buying Fire Insurance On Your Neighbor’s House — You Create An Incentive To Burn Down The House”: http://www.prisonplanet.com/naked-credit-default-swaps-are-like-buying-fire-insurance-on-your-neighbor%e2%80%99s-house-%e2%80%94-you-create-an-incentive-to-burn-down-the-house%e2%80%9d.html

[3] Here’s Why Everyone’s Thinking That Greece Might Default This Weekend: http://www.prisonplanet.com/heres-why-everyones-thinking-that-greece-might-default-this-weekend-read-more-httpwww-businessinsider-comspeculation-that-greece-will-default-2011-9ixzz1xxmxzjd1.html

[4] Fitch Downgrades Greece to ‘Restricted Default’: http://www.prisonplanet.com/fitch-downgrades-greece-to-restricted-default.html

[5] Greece Is Insolvent, Will Default on Debt: Fitch: http://www.prisonplanet.com/greece-is-insolvent-will-default-on-debt-fitch.html

[6] Roubini: Greece Should Default, Leave The Euro: http://www.prisonplanet.com/roubini-greece-should-default-leave-the-euro.html

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