The restructuring of Greece's government debt is not yet a credit event, a panel convened by a derivatives market trade organization said Thursday. A ruling of a credit event would have meant that bondholders who hold credit-default swaps - complex financial products that act as insurance against default - would have been paid off. The ruling by the committee convened by the International Swaps and Derivatives Association, meeting in New York and London, said however the Greek bond deal is still being carried out and that the question could come up again. Greece and its bondholders agreed on a debt swap that would reduce the face value of their holdings by 53.5 percent. The panel had been asked to rule whether the bond swap agreement itself constituted an event that meant creditors' derivatives insurance should pay off. It was also asked to rule on a bond swap carried out between Greece and the European Central Bank ahead of the creditor swap. The ECB got new bonds that were not subject to the agreed writedown, sparing it any losses. The panel had been asked to rule whether private credit holders had been subjected to a forced subordination of their holdings.

Subordination means someone else gets paid ahead of you, meaning you are less likely to see any money if the debt has trouble repaying. There has been concern that triggering of credit default swaps could unsettle financial markets or mean losses for the firms that sold them. However, analysts say that most swaps issuers appear to have hedged their risks, meaning the net payout would be relatively small. The decision is likely to be welcomed by finance ministers from the eurozone, who are meeting on Thursday in Brussels to check on Greece's progress in implementing promised spending cuts and economic reforms.

Greece has a wide array of policies and cuts to implement before it can receive a first batch of money from a euro130 billion ($173 billion) bailout Athens needs to avoid bankruptcy. So far, it looks like it's impressing its creditors. Germany's finance minister, Wolfgang Schaeuble, said he was optimistic that his eurozone colleagues would release the money to Greece. "From what I heard ahead of time, it looks as if Greece has made big progress,» he said, referring to Athens' implementation of reforms and spending cuts. «Because of that I believe we will make a big step forward today." Schaeuble's French counterpart Francois Baroin was equally optimistic over the disbursement. "Everything that was asked was generally done,» he said. «We are in favor of unblocking (the funds).»

[AP] -