It’s official, the ISDA will hold a meeting at 1100 GMT to decide on triggering Greek CDS. Presumably, the answer will be published shortly after the meeting.
It’s a hyped-up event but it probably won’t amount to much. The net exposure is around €2.3 billion so there is no risk of any party losing more than that.
Goldman is out today with a note saying it’s possible that CDS won’t be triggered with a 75% take up. Obviously, the ISDA has decided it doesn’t need to know the take up the PSI in order to make a ruling. That tells me that ECB subordination is enough for them to claim it’s a default.
It appears as though, the market has surely priced in a very high probability of the CDS trigger and given the market reaction to this news, it won’t be much of an event.
At this point, the bigger risk is that CDS aren’t triggered. The confusion, possibility of lawsuits and chance that it will make people re-consider participating in the PSI would spark a flight to safety.