Bloomberg News

EU’s Buti Says Greek CDS Trigger ‘May Have to Be Considered’

January 24, 2012

Jan. 24 (Bloomberg) -- European officials may have to weigh a Greek default that triggers credit default swaps if no voluntary deal with creditors is struck in time, said Marco Buti, head of the European Commission’s economics division.

If talks on private-sector involvement yield a deal quickly that draws “very large participation,” then “we will not need to trigger the CDS,” Buti said, speaking to the European Parliament’s committee on economic and monetary affairs in Brussels today.

At the same time, if there is no deal consistent with deficit targets that Greece must meet by 2020, “triggering CDS may have to be considered,” Buti said. He said Greece faces a large debt payment in March and that a decision needs to be “taken in the next weeks.”

Greece also is considering legislation on collective action clauses for existing bondholders. This prospect is “an element of incentive or pressure for voluntary participation,” Buti said.

At the same time, if there is no deal consistent with deficit targets that Greece must meet by 2020, “triggering CDS may have to be considered,” Buti said. He said Greece faces a large debt payment in March and that a decision needs to be “taken in the next weeks.”

Greece also is considering legislation on collective action clauses for existing bondholders. This prospect is “an element of incentive or pressure for voluntary participation,” Buti said.

--Editors: Leon Mangasarian, Kevin Costelloe.

To contact the reporters on this story: Rebecca Christie in Brussels at rchristie4@bloomberg.net;

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net;


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