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Gene Ellis

The Extraordinary Science of Addictive Junk Food - NYTimes.com - 0 views

www.nytimes.com/...nary-science-of-junk-food.html

science junk food

shared by Gene Ellis on 25 Feb 13 - No Cached
  • Gene Ellis on 25 Feb 13
     
    Excellent article!
Gene Ellis

Greek Credit-Default Swaps Are Activated - NYTimes.com - 0 views

dealbook.nytimes.com/...it-default-swaps-are-activated

greek

shared by Gene Ellis on 17 Jun 12 - No Cached
  • The decision by the International Swaps and Derivatives Association ends months of speculation that a Greek default might not set off the swaps, a result that could have undermined their role as insurance against debt defaults.
  • Still, doubts about the instruments’ effectiveness may linger. European officials initially shaped the Greek debt restructuring to avoid activating them. The concern is that future restructurings could be arranged to stop swaps from paying out.
  • Since then, banks and regulators have taken steps to strengthen the market, mostly by making sure that investors can pay out the money they owe on swaps.
  • ...7 more annotations...
  • The Greek government chose to apply so-called collective action clauses, which it had earlier inserted into its bonds registered under Greek law. The deal maximized total debt relief for the country,
  • but it also forced losses on bondholders — a credit event, and therefore a trigger, for the swaps.
  • the restructuring activated the swaps only after the country made a legal move on Friday.
  • Nearly $70 billion of swaps are currently outstanding on Greek debt. But after both sides settle their accounts, the amount that will need to be paid out should be no more than $3.2 billion.
  • Some investors entered swaps on Greece as a way of effectively insuring themselves against losses on their Greek bonds, while others used them as a way to bet on a default happening.
  • Before investors doubted Greece’s solvency, the swaps offered insurance at what turned out to be an extremely cheap price. At the start of 2008, an investor buying protection on Greek debt had to pay only $22,000 annually to insure against default on $10 million of Greek bonds over five years, according to Markit, a data provider. Now, the protection would cost about $7.6 million.
  • Investors will most likely continue to want default swaps to protect against losses on Greece’s new bonds. These bonds, to be issued Monday, are expected to have yields of well over 15 percent, according to advance pricing. This suggests investors have strong doubts about Greece’s creditworthiness even after its restructuring. Fitch Ratings said on Friday that it would probably give Greece’s new bonds a low, junk-bond rating.
  • Gene Ellis on 17 Jun 12
     
    Global
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