Can someone please explain
a) "CDS",
b) "Credit Event"
Why European Banks are waiting for a "Credit Event"?
And why the current Bailout deal is "voluntary" and why it will not trigger a Credit Event?
From my understanding, European Banks are not accepting the 50 Haircut Deal because, most of the Bonds they hold are hedged by holding credit default swaps. ie, why receive 50% when they can get 100% through CDS? So now, they are waiting for the "Credit Event"..
a) "CDS",
b) "Credit Event"
Why European Banks are waiting for a "Credit Event"?
And why the current Bailout deal is "voluntary" and why it will not trigger a Credit Event?
From my understanding, European Banks are not accepting the 50 Haircut Deal because, most of the Bonds they hold are hedged by holding credit default swaps. ie, why receive 50% when they can get 100% through CDS? So now, they are waiting for the "Credit Event"..