Greek Debt Rollover Won't 'Trigger' Default Swap: ISDA Counsel

Standard and Poor’s rating service has warned it would likely characterize a rollover of some Greek debt as a default, but this won't "trigger" a credit default swap, David Geen, general counsel for the International Swaps and Defaults Association, told CNBC Tuesday.


The vast majority of credit default swaps, known as CDS, are determined solely by the ISDA, which is comprised of five regional ISDA Credit Derivatives Determinations Committees.

The rollover plan under discussion looks like a “voluntary exchange,” which isn't covered by ISDA's definition of a CDS, he explained.

“A CDS is really trying to catch an actual default or something that’s very close to a default, and we never thought a voluntary exchange came that close to a default for CDS purposes,” he said.

Geen went on to say the CDS market on Greek debt is relatively small, with a net exposure of $5 billion and a gross value of $70 billion.

"So if you net out all the positions, you aggregate the net positions of different parties in the market you come up with $5 billion," Geen said.

"So no single participant could have more than $5 billion in exposure."

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