Greece's Rating Cut to Selective Default by S&P

by Marilou Long on February 28, 2012

in Banks,Credit Crisis,Debt,Foreign Markets

S&P has caught up to what everyone already knows:.  Most of today”s commentary is concerned with the impact of the downgrade on the CDS market.  From the linked article:

The bigger question remains whether the bond swap or collective-action clauses
will trigger payments on credit-default swap contracts. The International Swaps
and Derivatives Association, or ISDA, which determines when CDS payments are
triggered, has said it would decide Wednesday on whether the debt swap
constitutes a default in its view and thus would trigger payments on CDS, which
essentially act as insurance against a bond default. Euro-zone officials have
worried that widespread CDS payments could ripple through the euro-zone
financial system and exacerbate the region-wide debt crisis of which Greece has
become emblematic.

Germany has approved a 130 billion euro bailout, and all Angela Merkel has to show for it is a down her back.

 

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