Magic circle firm fields derivatives team for Greek debt crisis role

Allen & Overy (A&O) has continued its involvement in the European sovereign debt crisis with a key role advising the International Swaps and Derivatives Association (ISDA) Determinations Committee, which last week ruled that Greece had not yet defaulted on its debts.

The magic circle firm is fielding a team led by City derivatives and structured finance partner David Benton.

Based on Benton's advice, last Thursday (1 March) the ISDA committee voted unanimously not to activate credit default swap (CDS) contracts relating to Greek debt, spurring a strong response from the investment community.

Given a CDS is an insurance mechanism intended to protect and compensate bondholders against default or the devaluation of bonds, those holding Greek debt had sought immediate activation of Greece-related CDSs after being asked to write off more than half the value of their holdings of Greek Government debt.

It is thought that the grounds for not triggering the CDSs include the fact that Greece is continuing to make interest payments on its debt, as well as the voluntary nature of the request to bondholders to decrease the value of their holdings.

A&O's role comes after the firm was also retained last year to represent a steering committee of the Private Creditor-Investor Committee for Greece composed of private holders of Greek Government bonds.

Finance partner Yannis Manuelides, global restructuring and insolvency partner Katrina Buckley, international capital markets partner Matthew Hartley and special global counsel Philip Wood, all of whom are based in London, have been leading the firm's efforts, with much of the work taking place in Athens.

Other firms to have taken roles related to the Greek financial crisis include Linklaters, White & Case, Clifford Chance and Cleary Gottlieb Steen & Hamilton.