What's a "partial default"? In general, there's a set of events that are supposed to legally trigger CDS. Restructuring, re-denomination, missed coupon, etc... However, ultimately the decision falls to ISDA/committee of mkt participants and, finally, courts. That's what makes sov CDS into such a sh1tty scam product.
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The weekly: Greece to default/restructure THIS weekend? thread
- Thread starter TGregg
- Start date
Quote from Happy Hopping:
1) IN that case, does any1 has a link as to the actual figure of the cost of these CDS to insure Greece for 5 yr.?
2) Also, the CDS is to insure Greece of a default, pay out $50M. But what if it's a partial (structure) default? Does the institution who underwrite those CDS, for e.g., Goldman Sach, still have to honor the CDS if it's a partial default? What's in the fine print?
Here's a link for sovereign CDS rates
http://www.cnbc.com/id/38451750
thanks for the link. But when I click that link, it says
http://data.cnbc.com/quotes/GRCD5
5286 under Greece 5 yr. CDS
what is 5286? Don't tell me it's $5286 to buy a 5 yr. Greece CDS? That's not possible
http://data.cnbc.com/quotes/GRCD5
5286 under Greece 5 yr. CDS
what is 5286? Don't tell me it's $5286 to buy a 5 yr. Greece CDS? That's not possible
Quote from Martinghoul:
That they ultimately integrate... With or without Greece, but Greece is a special case. I think it's important to recall that the US has gone through this and managed to make it. Obviously, there are some differences, but still.
Maybe you should realize in virtually all of history, political union always comes before monetary union and inevitably this always meant violence and war. Look at China, today we think of it as a homogeneous nation but it fact 2000 years ago, it was made up of 14 countries which all had their own language often mutually unintelligible, currency, customs, units of measurement,etc. It took 500 years of horrific warfare before the first emperor of China wiped out everybody else, standardized everything and another few centuries to mold it into a homogeneous whole. Arguably it is today the longest lasting supranational entity in human history. How many people are you willing to see killed to achieve this kind of integration?
Huh? How much do you know about the history of Europe? What is it, if not hundreds of years of horrific warfare, culminating in the two World Wars of the 20th century? How many people killed during all those conflicts? To prevent more of the same is the whole point of the Euro, but maybe, as you say, more blood needs to be spilled and the idea is far ahead of its time.Quote from Grandluxe:
Maybe you should realize in virtually all of history, political union always comes before monetary union and inevitably this always meant violence and war. Look at China, today we think of it as a homogeneous nation but it fact 2000 years ago, it was made up of 14 countries which all had their own language often mutually unintelligible, currency, customs, units of measurement,etc. It took 500 years of horrific warfare before the first emperor of China wiped out everybody else, standardized everything and another few centuries to mold it into a homogeneous whole. Arguably it is today the longest lasting supranational entity in human history. How many people are you willing to see killed to achieve this kind of integration?
I think jrkob explained earlier in this thread... It's in basis points, not dollars and forget the whole upfront/running thing. So, according to CNBC, it's 5286bps or roughly 53 points. The number applies to the notional of the trade to give you the total cost.Quote from Happy Hopping:
thanks for the link. But when I click that link, it says
http://data.cnbc.com/quotes/GRCD5
5286 under Greece 5 yr. CDS
what is 5286? Don't tell me it's $5286 to buy a 5 yr. Greece CDS? That's not possible
Quote from Martinghoul:
Huh? How much do you know about the history of Europe? What is it, if not hundreds of years of horrific warfare, culminating in the two World Wars of the 20th century? How many people killed during all those conflicts? To prevent more of the same is the whole point of the Euro, but maybe, as you say, more blood needs to be spilled and the idea is far ahead of its time.
The political part is the only reason I think it'll hold together, since no one in Europe wants a repeat of 1914-1945 (for the eastern half, that end date would be 1990 or so).
Continuing on the whole Greek debt being under Greek rather than foreign law I brought up way back (http://www.elitetrader.com/vb/showthread.php?s=&postid=3276656#post3276656), another bit from the FT on this subject, which gets into the whole contagion thing and then gets into the interesting effect the legal stuff is having:
Also, a point I hadn't really thought of is how the domestic banking system is affected because of the lack of sovereignty over one's own currency. Really, the more I think about it the more I think the ceding of sovereignty is behind a large part of this mess:
The Governance of a Fragile Eurozone
In fact markets might re-price the periphery in advance of Greece leaving, during the months it would take to negotiate a formal exit via a treaty amendment. Releasing Greeceâs FX reserves for defending the Neo-Drachma from the Eurosystem (again, not provided for under current treaties) would deal a further blow to the credibility of original terms of euro monetary union as âpermanentâ and âirreversibleâ Community law. âThe permanent currency union would have been revealed to be a snowball on a hot stove,â Buiter says in his Tuesday note...
An English-law bond maturing in 2012 is currently priced at around 80, compared to Greek-law debt also maturing in 2012 priced at around 59, for example. This is mostly because of the way in which the current bond swap (which will also convert Greek-law bonds into English law) has affected the market. Holdouts in Greek-law bonds face considerable risks of a legal change to the terms of their bonds, whereas English-law holders are insulated from this risk. English-law holders receive greater protections against other creditors being secured above them as well.
Foreign-law bonds havenât really been seen as being additionally attractive for protecting against re-denomination risk. Until now, maybe?
Also, a point I hadn't really thought of is how the domestic banking system is affected because of the lack of sovereignty over one's own currency. Really, the more I think about it the more I think the ceding of sovereignty is behind a large part of this mess:
The Governance of a Fragile Eurozone
Quote from Happy Hopping:
thanks for the link. But when I click that link, it says
http://data.cnbc.com/quotes/GRCD5
5286 under Greece 5 yr. CDS
what is 5286? Don't tell me it's $5286 to buy a 5 yr. Greece CDS? That's not possible
You're mis-reading the quote. $5286 is in thousands and the underlying value to insure is 10 million. So right now it would cost roughly 5.3 mil to insure 10 mil of Greek debt for 5 years. :eek: