FRANKFURT (MNI) – The European Central Bank’s decision to assume
senior creditor status with regard to its holdings of Greek government
bonds does not trigger a payment on credit default swaps, the
International Swaps and Derivatives Association said Thursday.
The ECB last month swapped its Greek bonds for identical ones with
new dates, thus exempting itself from collective action clauses that the
Greek government retroactively inserted in its outstanding sovereign
securities. The action by the ECB means that, unlike private investors,
it would not be bound by the clauses should Athens choose to enforce
them in order to gain 100% acceptance of the pending private sector debt
swap proposal (PSI).
The association’s Determinations Committee also ruled that the
voluntary PSI agreement between Greece and its private bondholders,
expected to reduce Greece’s debt burden by E107 billion, does not
constitute a Restructuring Credit Event.
However, the Committee stressed that “the situation in the Hellenic
Republic is still evolving” and that future decisions that could trigger
credit default swaps cannot be excluded.
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–Frankfurt newsroom, +49-69-720-142; jtreeck@marketnews.com
[TOPICS: M$$EC$,M$X$$$,M$$CR$,MGX$$$]