Hat-tip to Joe Rennison at Risk.net, and Bloomberg — a mystery “CDS Holder” has asked Isda’s determinations committee to look at whether Argentina’s government could have potentially triggered CDS on the country during its confused responses to defeat at the Supreme Court last week…
The request — to extend a maturing CDS contract, hence the ‘potential’ language — centres on the economy minister’s statement last week that the judgment made paying the restructured debts “impossible”:
Our client (“CDS Holder”) currently is a buyer of a Credit Derivatives Transaction that is based upon the Standard Latin American Sovereign provisions in the Credit Derivatives Physical Settlement Matrix (the “CDS Contract”), which is scheduled to terminate on June 20, 2014 (the “Scheduled Termination Date”). The CDS Holder maintains that the Credit Derivatives Determinations Committee (the “Determinations Committee”) should Resolve an event that constitutes a Potential Repudiation/Moratorium for purposes of the relevant Credit Derivative Transaction has occurred (thereby establishing that a Repudiation/Moratorium Extension Condition has been satisfied).
It looks like the requesting lawyers came prepared in case Argentina does make a deal with Elliott:
Here, parties opposing the declaration of a Potential Repudiation/Moratorium event might argue that Argentina could settle with the litigating holdouts, or that the injunction could be modified, to allow for payment of the Obligations. While theoretically true, the argument proves too much. It is always the case that a party claiming inability or unwillingness to pay would pay if opposing litigating parties capitulate, or if the limiting condition is removed. An insolvent debtor always would pay upon winning the lottery.
Here’s Risk on what happens next:
In practice, the termination date should be extended until the next payment date due under the CDS contract’s referenced bond, or for 60 days – whichever is later, says the memorandum.If the question is not accepted by any member of Isda’s credit derivatives determinations committee for the Americas by 5pm tomorrow, it will be deemed dismissed…
Meanwhile though, go and look at the current voting non-dealers on the Isda DC as of April.
Any name jump out in particular?
http://ftalphaville.ft.com/2014/06/23/1883802/pari-passu-cds-interlude/
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