Greece's use of collective action clauses forcing investors to take part in the sovereign restructuring should trigger $3 billion of insurance payouts under rules governing credit-default swap contracts.

The International Swaps & Derivatives Association's determinations committee meets at 1 p.m. in London today to decide whether the use of CACs is a restructuring credit event which will cause a payout of swaps insuring Greek debt.

The Greek government said today it reached its target for participation in the restructuring, with investors in 95.7 percent of bonds taking part, after it received approval to activate CACs to force the hand of holdouts. Bondholders tendered 152 billion euros ($201 billion) or 85.8 percent, of bonds governed by Greek law after the government offered to swap their holdings for new securities, it said.

“After this morning's announcement that CACs clauses will be invoked I think most people would be surprised if the answer was negative,” said Elisabeth Afseth, a fixed income analyst at Investec Bank Plc in London. “I've been surprised throughout at the strong desire not to trigger CDS. This should be good for anyone seeking protection elsewhere, such as Spain or Italy.”

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