It becomes clear on 1 March whether the Greek PSI is actually a default

29 February 2012 / 14:02:38 GRReporter

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The International Swaps and Derivatives Association ISDA will meet tomorrow, 1 March, at 1 pm Athens time to decide whether the procedure for the involvement of private creditors in the Greek debt reduction PSI is a credit event and credit default swaps should therefore be paid. As reported by the Association, it had received a question from a group of investors and the Committee for Europe, Africa and the Middle East will meet on its grounds tomorrow to discuss the Greek case.
    About a year ago, replying to a similar question, the Committee decided that the PSI procedure triggering and in particular, the retroactive triggering of collective action clauses CACs does not necessarily mean a credit event. As of today, however, when all the details of the procedure are available, the Committee must decide exactly whether the Greek case is a credit event or not.
    Members of the Committee are ten banks with voting right, five large investment funds, and two members of an advisory role. To be considered mandatory, the decision of the Committee must be approved by at least twelve votes. If they come together under the decision that the Greek case is a credit event, it means that all holders of Greek credit default swaps will be rewarded for their foresight. The Committee involves the USA banking giants Bank of America, JPMorgan, Chase and Morgan Stanley, and the European Barclays, BNP Paribas, Credit Suisse and Deutsche Bank.
    The International Swaps and Derivatives Association was founded in 1985 and is one of the largest organizations in the global financial market. It has over 815 members from 58 countries on all continents - global, international and regional banks, governments and supranational institutions, corporations, law firms, energy and trading companies, stock exchanges, clearinghouses.