Play with my POLL: Will Greek CDS trigger tomorrow?
- Thread starter halik
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- Oct 10, 2000
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sm625
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- May 6, 2011
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The CDS have to trigger eventually. Otherwise the entire CDS market becomes a big fat zero, since Greece is factually defaulting. It already has. By any measure of the word, Greece has defaulted. It's a simple word with a simple definition. And the contracts themselves define it very clearly. You miss one payment on your mortgage you have defaulted.
Many positions have to be unwound if the CDS hedging them are made worthless. No one will want to buy sovereign bonds if the CDS used to hedge them prove to be worthless. It would be portfolio insurance all over again... and would lead to another 1987 followed by another Federal Reserve Tax on the lower class to bail out those who lost money on wall street. (ie $6 gas and $5 for a lb of bacon)
They're always messing with the market. It's just like when they bailed out the union pensions at the expense of the secured creditors. What they did was very bad for the capital markets. We may not be feeling it now with this cyclical bull market, but when the secular bear reasserts itself, what these people have done is going to bite hard. They are tearing down everything that made this country so much stronger than say a Soviet Union or a Mexico. If people cannot trust that the state is not going to interfere in the market then the market can and will wither away. At which point the state just declares by fiat that its worthless paper is actually worth something... by printing more and more. We know how that ends.
Many positions have to be unwound if the CDS hedging them are made worthless. No one will want to buy sovereign bonds if the CDS used to hedge them prove to be worthless. It would be portfolio insurance all over again... and would lead to another 1987 followed by another Federal Reserve Tax on the lower class to bail out those who lost money on wall street. (ie $6 gas and $5 for a lb of bacon)
They're always messing with the market. It's just like when they bailed out the union pensions at the expense of the secured creditors. What they did was very bad for the capital markets. We may not be feeling it now with this cyclical bull market, but when the secular bear reasserts itself, what these people have done is going to bite hard. They are tearing down everything that made this country so much stronger than say a Soviet Union or a Mexico. If people cannot trust that the state is not going to interfere in the market then the market can and will wither away. At which point the state just declares by fiat that its worthless paper is actually worth something... by printing more and more. We know how that ends.
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Q: How many of the ISDA banks sold basis packages?
A: All of them!
Having said that, I think when you trade 79 up, it's pretty hard to say the market doesn't think this will be a credit event.
A: All of them!
Having said that, I think when you trade 79 up, it's pretty hard to say the market doesn't think this will be a credit event.
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- Oct 10, 2000
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5-6 of the 15 on the committee are buy side firms - without a super majority vote the decision is deferred to a third party group (that presumably has no interests).
Not triggering CDS will have an interesting impact on other sovereign issues; people will drop italy/portugal/ireland like 3rd period french.
All of the banks on committee have sold basis packages. The basis packages, make Greek CDS a huge conflict of interest.
Not triggering CDS is another huge conflict of interest, if people lost faith in the instrument, the banks lose the high margin naked CDS packages or higher margin basis packages.
IDK this whole Greek deal is strange, the whole CDS market has become stranger. Put it on an exchange, take billions of dollars in spreads from the TBTF and move on. Greece has at this point just shown how poor the CDS market is.
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- Oct 10, 2000
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If it's coming from that one Athens newspaper, it's horseshit. There's been rumors coming from that place throughout the year (and dispelled by greek authorities within 2 hrs), especially around the EFSF votes etc. Not holding my breath, given the incentive of buy side money.
RTR now claiming 85%.
This has to be the Greek law stuff.
"Greek bank official says debt swap participation about 85%, though figures are preliminary."
And there's your CDS trigger...
It also isn't really broken out is this with CAC, is this Greek law only, etc.
TAKE-UP IN GREEK BOND SWAP WAS NEARING 95 PCT AN HOUR BEFORE DEADLINE EXPIRED - SENIOR GREEK GOVT OFFICIAL
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Take-up in greek bond swap was nearing 95 pct an hour before deadline expired - senior greek govt official
a777pilot
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- Apr 26, 2011
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Why?
Do you have any idea what the purpose of the EU and their Euro was?
If not, you may be to ignorant of facts to adequately debate this issue.
- Oct 10, 2000
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Was that coming from the Athens newspaper? That's literally the same line the used to move EURUSD when the opposition party was trying to block the earlier austerity and EFSF votes. Rumors from "senior greek official" hitting the squak via some athens newspaper, eurusd spiking and then dropping back that when the official retort hit the wires.
BBG...
And more
16:19 DJ CORRECT: Greylock Capital Chief: People Involved In Greek Bond Swap Say Participation Exceeded 90%
This is looking more like a no, then earlier...
Edit @ 4:40
FT: One person involved in the deal later said total participation would top 90 per cent, and maybe even 95 per cent if “collective action clauses” were used as expected.
I think they are all arguing the same thing, just bad reporting. Real voluntary participation is probably just north of 75%. With CAC that puts participation close to 95%.
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Personally I think it is with CAC, however there are lots of headlines flying around from a lot of sources. It's not being broken out well, to say the least.
Greylock and DJ seem to believe the 90% IS VOLUNTARY, however. FT on the other hand thinks that it is not...BBG is quoting that Greek official who says 95%, which I have to think includes the CAC.
*DJ Greylock Capital Chief: People Involved In Greek Bond Swap Say Participation Exceeded 90%
*DJ Greylock Capital Chief: Up To Greece To Use CACs After Such High Participation Rate
Edit: 14:53 Oh well, I am going home and will not have access to wires until morning. Ciao...
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