Anxiety over PSI and the Greek bond swap

Worried about your 401k? Here's what's rattling the stock market today.

A brief glossary for those who have avoided becoming addicted to the "Greek Crisis". I commend you.

PSI - Private Sector Involvement, in this case, institurions or individuals other than banks who <snicker> own Greek bonds

CAC - Collective Action Clause. Pretty complex See here

CDS - Credit Default Swap. Simplest explanation I've seen is in This short video

ISDA - International Swaps and Derivatives Association. They're here

"Uncertainty over the participation in the Greek bond swap is a major source of anxiety today. Rumors circulated earlier that the PSI "invitation" would be extended by a week due to low participation have been officially denied, but rumors themselves illustrate the market’s apprehensions.

It does appear that participation will be sufficient to incorporate the collective action clauses (66%), but not the 90% official goal. The Greek government has signaled willingness to invoke the CACs, if necessary. This may have been an attempt to demonstrate its resolve as surely the preferred outcome is to maintain the veneer of voluntarism. Moreover, invoking the CACs would most likely be regarded as a credit event by ISDA and trigger the credit default swaps."

Now, a credit event that trigger credit default swaps are seen by stock markets as A VERY BAD THING, hence the anxiety. So now you know.

http://www.creditwritedowns.com/2012/03/anxiety-over-psi-and-the-greek-bond-swap.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditwritedowns+%28Credit+Writedowns%29