The ISDA decides if Greece has a deal

Author: Adam Button | Category: News

The fund manager quoted in the Bloomberg story about a Greek haircut deal said he is “highly confident” it will get done.

A two thoughts:

  1. The fund manager says the deal probably won’t be paid until shortly after March 20, when Greece is expected to duck out on €14.5B due. I was under the impression there was a Jan 31 deadline for a deal. That’s when Greece is supposed to finalize another round of bailout funds.
  2. The International  Swaps and Derivatives Association (ISDA) determines whether credit-default swaps will be paid out. Regardless of a deal, all it takes is one bondholder to hold out and it could trigger the CDS. A portion of the market may be under the impression that Greek CDS are under control but yesterday Draghi didn’t sound so sure.
The takeaway: buy the euro at your peril when a Greek deal is announced because the ISDA could send it right back down.
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