Is the Bear Stearns “Rescue” a Credit Event?

Is the Bear Stearns (BSC) “rescue” a credit event for the BS CDS protection buyers?

I am not a lawyer, but at first sight the answer is probably NO.

JPMorgan (JPM) is assuming all BS liabilities so the CDS should converge with JPM.

There are 6 credit events:

1.Bankruptcy

2.Failure to pay

3.Obligation Acceleration

4.Obligation Default

5.Repudiation/Moratorium

6.Restructuring

BS is not bankrupt. The one that will fool outsiders is number 6: restructuring. There is no restructuring here as far as liabilities are concerned.

Comments

[robster]

obligation default?