Will Greece Formally Default on Thursday
March 5, 2012 • 1:42AM

Moody's downgraded Greece to its lowest level on March 2, because it expects the much ballyhooed "haircut" negotiations to end in a default this coming week. Thursday, March 8, is the deadline for Greece to announce what percentage of its bondholders have "voluntarily" agreed to the terms of their haircut. If it doesn't reach 95%, which it almost certainly will not, then Greece will invoke the so-called Collective Action Clause (CAC) of the deal, which imposes the "haircut" on everyone, like it or not. That in turn will lead the International Swaps and Derivatives Association (ISDA) to declare the whole proceeding to be a "credit event," i.e., a default, and thus activate untold billions in credit default swaps.