German government bonds are trading little changed Friday as market awaits verdict from the ISDA to see if a credit event has occurred in the wake of the Greek PSI deal. Also eyed is US payrolls data. Greece has avoided a disorderly default after it secured 85.8% participation by private sector creditors in its debt exchange offer of bonds under Greek law, i.e. E152bln of the total E177.0bln. The Greek Finance Ministry added that E20bln of participants in foreign-law bonds took part, which is 69% of the outstanding and less than the required 75% – and unable to invoke CACs on these bonds – it has extended the deadline for PSI on foreign governed bonds to Mar 23. However, it will activate Collective Action Clauses (CACs) that forces the remaining private bondholders (E29bln) to accept the terms of the debt swap offer, which will take the participation post-CAC to E197bln out of the total E205.85bln or 95.7%. Attention now turns to the ISDA meeting at 1300GMT to see if a credit event has occurred and if a CDS will be triggered, which is now seen as most likely given the use of CACs.
EasyForexNews Research Team