–Clarifies That ISDA Found ECB CAC Exemption Doesn’t Subordinate Others
–Trade Group Says ECB CAC Exemption Not A Cause To Trigger CDS Payments

PARIS (MNI) – The International Swaps and Derivatives Association
has determined that there is so far no “credit event” that justifies
triggering credit default swap payments on Greek sovereign bonds, the
ISDA announced in a statement released Thursday.

The trade group’s “Determinations Committee,” composed of hedge
funds, large banks and investment houses, found that neither Greece’s
private sector debt exchange (PSI) nor the European Central Bank’s
exemption from collective action clauses (CACs) in Greek bonds
constitutes a default that should lead to CDS payouts.

However, it did not rule out possible CDS payments at a later date,
noting that the situation in Greece was still evolving and new facts
could come to light and be taken under advisement.

The text of the ISDA statement is below:

“In light of today’s EMEA Determinations Committee (EMEA DC)
unanimous decisions in respect of the two potential Credit Event
questions relating to the Hellenic Republic (DC Issue 2012022401 and DC
issue 2012022901), the EMEA DC has agreed to publish the following
statement:

The first submitted question (DC Issue 2012022401) asked whether
the holders of Greek law bonds had been subordinated to the ECB and
certain NCBs whose bonds were acquired by the Hellenic Republic prior to
the implementation of new Greek legislation such that such subordination
constitutes a Restructuring Credit Event. (The full text of the question
is available here http://www.isda.org/dc/view.asp?issuenum=2012022401.)

The EMEA DC unanimously determined that the specific fact pattern
referred to in the first submitted question does not satisfy either limb
of the definition of Subordination as set out in the ISDA 2003 Credit
Derivatives Definitions (the 2003 Definitions) and therefore a
Restructuring Credit Event has not occurred under Section 4.7(a) of the
2003 Definitions.

The second submitted question (DC Issue 2012022901) asked whether
there had been any agreement between the Hellenic Republic and the
holders of private Greek debt which constitutes a Restructuring Credit
Event. (The full text of the question is available here

http://www.isda.org/dc/view.asp?issuenum=2012022901.)

The EMEA DC determined that it had not received any evidence of an
agreement which meets the requirements of Section 4.7(a) of the 2003
Definitions and therefore based on the facts available to it, the EMEA
DC unanimously determined that a Restructuring Credit Event has not
occurred under Section 4.7(a) of the 2003 Definitions.

The EMEA DC noted, however, that the situation in the Hellenic
Republic is still evolving and today’s EMEA DC decisions do not affect
the right or ability of market participants to submit further questions
to the EMEA DC relating to the Hellenic Republic nor is it an expression
of the EMEA DC’s view as to whether a Credit Event could occur at a
later date, in each case, as further facts come to light.”

–Paris newsroom, +331-42-71-55-40; paris@marketnews.com

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