MW: Spain bailout won’t trigger CDS, aiding euro
Part of what’s helping the euro and weighing on Treasury bond prices Tuesday was a little relief that Spain’s bank bailout announced over the weekend is unlikely to count as a credit event that requires the payout on credit default swaps, media reports said .
“Concerns about the Spanish bank bailout are being eased somewhat as the ISDA [International Swaps and Derivatives Association] announced that the proposal is not likely to trigger a credit event due to subordination,” said Eric Viloria, senior currency strategist at Forex.com.
But the relief will be limited, as evidenced by the continued rise in Spanish and Italian bond yields.
“Despite some clarification on the effects of the Spanish bank bailout, many uncertainties remain,” Viloria said.
