ECONOMY

Greek CDS stripped from sovereign risk index

Greek credit default swaps were stripped on Tuesday from a benchmark measure of European sovereign debt risk after traders ruled that contracts on the nation can be paid out.

The new version of the Markit iTraxx SovX Western Europe Index linked to credit default swaps on 14 governments was trading at about 230 basis points early in the afternoon, according to BNP Paribas SA.

The gauge had closed at 353 basis points on Monday before Greece was removed.

Greek swaps will be settled following an auction on Monday after it was ruled last week that the use of collective action clauses to force all investors to take part in the nation?s debt restructuring was a credit event.

[Bloomberg]