Credit derivatives houses are waiting for the outcome of the U.K. government's restructuring plans for British Energy before triggering credit protection. One credit derivatives trader, however, said lawyers at his firm are examining triggering swaps under a bankruptcy clause, claiming that it has taken "action in furtherance of, or indicating its consent to" bankruptcy.
Guy America, European head of credit-default swap trading at JPMorgan in London, said triggering the swap now would be a relatively aggressive stance since the information is not yet clear. He added, however, that most traders think protection will be triggered at some point but are "happy to wait until the next event happens, so it is clean and clear." Other credit derivatives traders and heads of desks agreed it was worth waiting to send out credit notices since it seemed unlikely the swap would not be triggered.
