Greece: "Triggering CDS might have more positive than negative implications"

from Bloomberg..

Sellers of credit-default swaps on Greece will have to pay as much as $2.5 billion to settle contracts triggered by the nation’s debt restructuring.

The settlement was determined after dealers agreed a final value for Greek bonds of 21.5 percent of face value at an auction, according to administrators Markit Group Ltd. and Creditex Group Inc., and is in line with where the notes have been trading.

-snip-

“The fact that CDS works means it can remain a viable hedging instrument and be used for trading purposes as well,” said Elisabeth Afseth, an analyst at Investec Bank Plc in London. That’s important because “the product is there as a hedge for other sovereign investors, and significant risk remains in Europe.”

-snip-

“Triggering CDS might have more positive than negative implications for European government bond markets,” said Ioannis Sokos, a fixed-income strategist at BNP Paribas SA in London. “It’s a clear demonstration that there is a functioning hedging tool out there for holders of other peripheral bonds.”

more: http://www.bloomberg.com/news/2012-03-19/greek-bonds-get-final-value-of-21-5-in-default-swaps-auction.html

My comments: Its interesting how this turned out as many "experts" predicted a very ugly scenario if this happened. Of course the crisis is not over but the initial shock of triggering the CDSs is.