Greece avoids credit event verdict by ISDA by unanimous decision

By Susanna Moon

Chicago, March 1 - The International Swaps and Derivatives Association, Inc.'s EMEA determinations committee unanimously decided that a credit event had not occurred with respect to Greece.

The committee made unanimous decisions regarding two potential credit event questions, according to press release.

The first submitted question asked whether the holders of Greek law bonds had been subordinated to the European Central Bank and certain National Central Banks, whose bonds were acquired by Greece prior to the implementation of new Greek legislation that says subordination constitutes a restructuring credit event.

The committee said it 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, and therefore a restructuring credit event has not occurred.

The second submitted question asked whether there had been any agreement between Greece and the holders of private Greek debt, which constitutes a restructuring credit event, the release noted.

The committee said it determined that it had not received any evidence of an agreement, which meets the requirements of the definitions.

The committee noted that the situation in Greece is still evolving, that its decisions do not affect the right or ability of market participants to submit further questions regarding Greece and that it is not an expression of the committee's view as to whether a credit event could occur at a later date as more facts come to light.

Last Friday, Greece announced the terms of a distressed exchange offer it will hold for €206 billion of its bonds. It will seek consent to exchange €177 billion of additional bonds on the same terms.

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