The 85.8% participation rate in Greece's PSI allows the country to avoid a messy default, but...


The 85.8% participation rate in Greece's PSI allows the country to avoid a messy default, but the country's activation of collective action clauses (forcibly bringing participation to 95.7%) likely forces the ISDA's hand in declaring a "credit event." This move would trigger payouts on CDS - likely not a major event as a sizable chunk of these contracts have already been closed out. The ISDA Determination Committee meets at 8 AM ET.
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Comments (4)
  • D_Virginia
    , contributor
    Comments (2278) | Send Message
     
    Hmmm...buy the rumor sell the news?

     

    Of course, with Greece, essentially everything rumor.
    9 Mar 2012, 07:16 AM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
     
    You say its not a big deal...but boy are they sure doing everything they can to not trigger it....like they extended the date 3 days.....seems to me it is a big thing if they are that scared about the trigger...Greece has just showed the world how corrupt they system is...changing rules..Retroactive...ECB is not a part of it...No CDS trigger for a 70% reduction in value....so now as an investors....do CDS look like a good buy...and you accountants...are they a hedge on a Bankers books now....And since these were a big income generator for banks...what next?...and as an investor..will you buy more sovereign debt as you now know the rules can and will change on you....lots of fallout here
    9 Mar 2012, 07:24 AM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (562) | Send Message
     
    The extension was made for owners of foreign law bonds (about €29B of the €206B total). The CACs have been activated for all Greek law bonds.

     

    Greece has threatened to default on the foreign law paper, but all of their debt now is new bonds and troika loans, so it won't be a big deal, other than paying a lot of lawyers for a lot of years.
    9 Mar 2012, 07:34 AM Reply Like
  • Dr. V
    , contributor
    Comments (1168) | Send Message
     
    Don't dismiss this too quickly.

     

    Domino effect just may still occur, due to the widely known and very transparent, yet unregulated practice of netting.

     

    Systemic risk is there, just under the surface.

     

    Why did Deutsche Bank just borrow 10 Bil Euros?

     

    They have argued against borrowing for years, and now have come to beg.

     

    What gives? Why now?

     

    As one (1) of two (2) German Retail Banks left, (the other being Commerzbank, also teetering on insolvency) Deutsche Bank is at MASSIVE risk.

     

    Deutsche Bank is levered 60:1 on a TCE/assets basis, and that its Basel “risk-weighted” assets are only $450 billion, but actual balance sheet assets are $3 Trillion?"

     

    * Due to the Basel standards, which count sovereign and other AAA assets as risk free, Deutsche Bank has $2.5 trillion of assets with zero capital backing.

     

    With profits down 70% Q4, and only 5 Bil Euros profit for the year, down more than 5 Bil Euros,.............. Deutsche Bank looks to be in serious trouble.

     

    Most of the Major German Industrials, bank with Deutsche Bank.

     

    When Deutsche Bank goes, so do the Major Industrials, and it's bye bye Germany.

     

    NOTE:
    That is not a bad thing, many have warned them about their sense of "pseudo moral superiority", often demonstrated at the cost of the periphery.

     

    DISCLAIMER: No German Investments held due to common sense, and historical public records available.
    10 Mar 2012, 04:51 AM Reply Like
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