If that is the case, the actual payout would be in the area of $2.36 billion. DTCC's data, as of February 17, indicates there are 4,263 actively traded contracts on Greek sovereign debt, which add up to a gross value of $69.9 billion. When the contracts are offset against each other, the notional value is reduced to the $3.2 billion. ISDA said on Monday one of its members asked the governing body if last week's approval by Greece's Parliament to implement collective action clauses, or CACs, on debt governed by Greek law constitutes a so-called «restructuring credit event." ISDA's European Determinations Committee had said it would announce by 5 p.m. GMT (12 p.m. EST) on Wednesday whether to entertain the question. At issue is the retroactive inclusion of CACs in sovereign debt governed by Greek law. CACs force all bondholders to proceed with a swap once it has won a specified level of approval. The ISDA member contends that not all bondholders are being treated equally.
The question asks whether the Greek debt restructuring is a «credit event» because it subordinates eligible bondholders to the European Central Bank and other national central banks, which hold sovereign debt governed by Greek law. Private investors holding about 200 billion euros of Greek bonds will take a loss of 53.5 percent in the face value of their holdings and a real loss of 73-74 percent. According to the new law, the swap will go ahead once 50 percent of bondholders have responded to the offer, and the CACs will be activated once a two-thirds majority of that quorum has voted in favor of the swap. A credit event occurs, or is triggered, when there is either a failure to pay, a repudiation/moratorium, or restructuring of the underlying debt. Also at issue is whether the announcement results directly or indirectly from a deterioration in the credit-worthiness or financial condition of Greece. ISDA's regional Determinations Committees discuss issues involving credit events, CDS auctions, succession events and other issues, with decisions governed by a set of internal rules.
[Reuters] - Ekathimerini.com