The holders of $22 billion in Italian CDS may be growing anxious after receiving news that a 50 percent haircut on Greek debt will fail to trigger a credit event that would force sellers of the swaps to pay out.


If this failed to trigger a CDS event, many investors may find themselves without protection, potentially triggering substantial and unexpected losses.

More broadly across Europe, DTCC data show that net notional CDS outstanding for France, Italy, Germany, Spain and the U.K. total nearly $100 billion. [Michael McDonough. Efficacy of CDS in doubt. Bloomberg Brief: Economics. October 28 2011]

4 Responses to “[2451] Damned if you do, damned if you don’t”

  1. on 31 Oct 2011 at 19:06 moo_t

    Seems everyone taking the “government bond” for granted. Anyone helping government fooling around with irresponsible money printing policies deserved it. Monetary liquidity does not mean freedom of printing notes.

  2. on 31 Oct 2011 at 20:59 Hafiz Noor Shams

    I somehow don’t think you understood what you read.

  3. on 01 Nov 2011 at 08:24 hishamh

    Occupational hazard :)

  4. […] should be read in the context of the 50% Greek haircut, although that haircut itself is in question after the Greek government decided to have a […]

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