Greek crisis poses problems for CDS market

Expectations of a Greek debt restructuring are growing, but there are concerns credit default swap (CDS) contracts will not be triggered – something that could have a severe impact on the CDS market. Are these fears justified? Mark Pengelly investigates

Helen Haworth

Buyers of credit default swap (CDS) protection are doing some real soul-searching. The issue is, in some respects, straightforward: do they think Greece will restructure its debt, and will that trigger a credit event on the associated CDS contracts? If the answers are yes and no, respectively, should they bother to buy sovereign CDSs at all? Some analysts and dealers suggest it’s not obvious they should – a feeling that, if reciprocated by protection buyers, could have a chilling effect on the

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