Greek credit event reshapes global CDS market dynamics and investor behavior.
The Greek credit event in 2012 had little direct impact on CDS spreads, showing it was expected. However, the Greek CDS network structure changed significantly, with fewer connections and reversed positions. Other CDS markets saw temporary spill-over effects, with traders reducing exposures to EU periphery sovereigns. Banks in the EU periphery also decreased CDS exposures, indicating a bank-sovereign nexus.