4 ms·
The important piece of this is that something has had an 'Event of Default' : That will cause all the Credit Default Swaps (CDS) written against Greek debt to t
by mdda 15y ago
The important piece of this is that something has had an 'Event of Default' : That will cause all the Credit Default Swaps (CDS) written against Greek debt to trigger.
Banks (mostly European banks, as I understand it) that held Greek debt, but insured it using CDS (written mostly by US banks, ditto), will be able to hand the problem to their counterparties, in exchange for 100%.
There may be some very interesting consequences about to unfold...
- ristretto 15y agoHowever one must note, out of the $400B or so of greek debt, only $4.8B are CDS-insured. http://online.wsj.com/article/BT-CO-20110708-711764.html http://online.wsj.com/article/BT-CO-20110708-711764.html
- chollida1 15y agoIt's important to note, it's not the amount of debt that is CDS-insured but the number of CDS contracts that have been written. The same 4.8B could have been insured 1000 times.