PARIS (MNI) – The International Swaps and Derivates Association
said today that its “determinations committee” will convene at 13h00 GMT
to decide whether the private sector debt exchange (PSI) whose results
were announced early this morning by the Greek Finance Ministry
constitutes a “credit event.”

The ISDA said an interested party had submitted a question asking
it to make that determination. An affirmative answer to the question
would trigger payments of credit default swaps on Greek sovereign bonds.

Greece said this morning that voluntary participation in the debt
exchange, offered to holders of the E206 billion in privately-held Greek
bonds, was 83.5%, covering E172 billion of the targeted securities.
Another E25 billion will be essentially forced to accept the deal by the
activation of collective action clauses (CACs), bringing the total
participation to 95.7%, or E197 billion.

It is those recalcitrant investors who presumably would benefit by
the triggering of CDS payments.

A group of other investors, holding E9 billion worth of bonds not
subject to Greek law – and thus not bound by the CACs – have so far not
responded to the offer or have declined to accept it.

Greece has given that group of investors until the evening of March
23 to respond, and has made clear that in the event they do not accept
PSI, there will be no funds available to pay off their outstanding
bonds. They, too, would clearly benefit from CDS payments.

Earlier this month, the ISDA ruled on two other questions asking if
the Greek PSI deal constituted a credit event that would trigger the
CDS. One of the questioners sought a credit event ruling based on the
fact that the European Central Bank had exempted its Greek bond holdings
from the collective action clauses, thereby arguably relegating other
creditors to suboordinated status. The other question pertained to the
PSI deal itself.

In both cases, the ISDA ruled that no credit event had occurred,
but it left the door open to future petitions on the matter pending the
outcome of PSI. That was widely understood to mean that it expected
another question to be submitted if and when Greece completed the deal
and decided to activate the CACs.

The total participation numbers announced by the Greek Finance
Ministry this morning assume the CACs will be activated. Finance
Minister Evangelos Venizelos, speaking moments ago in Athens, said the
Greek government and the Eurogroup of EMU finance ministers could decide
as early as today to activate the CACs.

Venizelos said that the extension of the deadline for the holders
of foreign-governed bonds who have not yet accepted the PSI deal could
allow Greece to reach 100% participation.

A verbatim text of the ISDA’s statement is below:

“The International Swaps and Derivatives Association, Inc. (ISDA),
as secretary to the Determinations Committees (the DCs), today announced
that a question relating to a potential credit event with respect to the
Hellenic Republic (Greece) has been submitted to, and subsequently
accepted for consideration by, the EMEA Determinations Committee.

The ISDA EMEA Determinations Committee will meet at 1PM GMT on
Friday, March 9 to discuss the question and to determine whether a
credit event has occurred.

Further information regarding the question is available at
www.isda.org/credit.”

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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