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Daily Insurance Industry News
Saturday 23rd of June 2018
October 28, 2011

Allianz comfortable with Greek debt writedown

by Gill Montia

Story link: Allianz comfortable with Greek debt writedown

Allianz comfortable with Greek debt writedown

Allianz SE has confirmed that it wrote down its holdings in Greek sovereign bonds in the second quarter of 2011, to an average nominal amount of 54%.

In the current situation, the group does not expect recent EU decisions to have any further impact in the fourth quarter, although this does depend on whether the markets accept the proposed solution and how it is implemented technically.

The insurer has welcomed the Eurozone’s proposals on the Greek debt crisis, saying it demonstrates that Europe is capable of arriving at “viable compromises” across borders.

Allianz sums up: “This will be a cornerstone for a long-term solution to the debt crisis”.

Meanwhile, the International Swaps and Derivatives Association (ISDA) has confirmed that a decision on whether the 50% haircut on Greek government bonds is a “credit event” under credit default swap (CDS) documentation will be made only when the proposal is formally signed and if a market participant requests a ruling.

However, based on ISDA’s current understanding, it appears that the bond restructuring is voluntary and not binding on all bondholders.

As such, it does not appear to be likely that it will trigger payments under existing CDS contracts.

 

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