ISDA_ Η Αληθεια για τα CDS, Ελλαδα, Πιστωτικο Γεγονος_ εως και ΠΡΟΧΤΕΣ !

Greek Sovereign Debt Q&A (Update)July 25, 2011The following are responses to the most frequently-asked questions that ISDA has received in connection with the application of credit derivatives to a potential restructuring or reprofiling of Greek sovereign debt. The following does not constitute legal advice, and is subject in all respects to any determination that the ISDA EMEA Credit Derivatives Determinations Committee may make in relation to CDS referencing the Hellenic Republic (Greece). ISDA makes no comment on the likelihood of the events described in this Q&A. UPDATE JULY 25:The determination of whether the Eurozone deal with regard to Greece is a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee when the proposal is formally signed, and after a market participant requests a ruling from the DC. Based on what we know at this point, we can say the following. The package is in two parts:First, the official sector part: more aid money; expansion of EFSF. All we have so far is the Statement of Heads of State and some general news reports. On the basis of these, there does not appear to be anything relevant to CDS.Second, the private sector (IIF) part: a proposal for a voluntary exchange of debt, with four options. Since this is expressly voluntary, it should not trigger CDS. Also, since it is at this stage simply a proposal, there is nothing yet to raise to the determinations committee. INFORMATION ORIGINALLY POSTED ON JULY 8:How are Credit Default Swaps documented?The vast majority of Credit Default Swaps (CDS) are documented using the 2003 ISDA Credit Derivatives Definitions, as supplemented by the July 2009 Supplement. The Definitions can be obtained from ISDA’s Bookstore.What triggers CDS?The CDS contract contains a number of elections that parties can make (for example, which events from a menu of potential Credit Events will apply, what obligations are relevant for triggering a Credit Event, what kind of obligation will be deliverable if a Credit Event occurs). Of course, parties are free to agree to make whichever elections they wish, but standard elections are generally used for particular transaction types (so, for example, some of the elections for North American corporates, will be different from those for, say, Western European Sovereigns).A CDS is triggered when a Credit Event occurs. There are three Credit Events that are typically used for Western European Sovereigns (including Greece), they are: Failure to Pay; Repudiation/Moratorium and Restructuring. We will focus on Restructuring for these purposes.The Restructuring Credit Event is triggered if one of a defined list of events occurs, with respect to a debt obligation such as a bond or a loan, as a result of a decline in creditworthiness or financial condition of the reference entity. The listed events are: reduction in the rate of interest or amount of principal payable (which would include a “haircut”); deferral of payment of interest