The CACs themselves come with a set of specific rules and thresholds that has led to confusion. Here we try to clarify these thresholds and provide an illustration of how they would work by applying their minimum standards to the €177 billion bond swap.

Creditors have two decisions: whether to tender their bonds and whether to agree to the triggering of the CACs. If you tender your bonds, you're deemed to have voted in favor of triggering the CACs.

The Greek-law bonds require holders of 50% or more of the bonds to vote for their vote to be effective. This means that, at a minimum, a decision can be reached if just half of the €177 billion bondholders–i.e. creditors holding €88.5 billion–are represented.

Of those voting, a super-majority of two-thirds must agree to invoke the CACs. This means that, under the minimum participation scenario, Greece can push the deal through with the support of the holders of a mere one-third of the €177 billion, or some €59 billion. On the flip-side, the blocking minority in the minimum participation scenario is one-sixth or €29.5 billion.

According to their own disclosures by the end of 2011, Greek banks, Cypriot banks, together with the 12 financial institutions that stepped forward on Monday in favor of the proposed bond swap, held more than €60 billion. Others, including Greek pension funds that hold an estimated €23 billion in bonds, are also likely to vote in favor. That should be enough to give Greece confidence that there will be sufficient votes to impose the bond-swap terms on holdouts.

Eoin Treacy's view Greece's collective action clauses (CAC) ensure that it will be able to force through the bond swap that formed a good portion of its recent agreement with the bailout troika of the ECB, IMF and European Commission. The manner in which it does so looks set to cause some controversy. It is unlikely to get the number of creditors needed to avoid activating the CACs. This would substantially bolster the case of those arguing before the International Swaps & Derivatives Association (ISDA) that the lowering of coupons and lengthening of maturities constitutes a credit event in which CDS contracts should become active.

Greek CDS contracts stopped updating in September since their raison d'etre became obsolete given ISDA's ruling. Any reasonable person would look at the Greek restructuring and conclude that default has occurred. However, the EU has demonstrated that it is willing to influence ISDA proceedings. There is every reason to expect that it will continue to attempt to ensure that the Greek restructuring is not treated as a default. Nevertheless, investors are voting with their feet. Greek spreads remain at extraordinarily wide levels: 22,739 and 3500 basis points for the 2-year and 10-year over Bunds respectively. Despite the buying of time for the country, there is no evidence as of yet that selling pressure on Greek debt has abated. .

Portuguese spreads have also experienced upward pressure since the ECB's LTRO sales last week; rising from below 1200 to almost 1400 basis points since mid-February. A sustained move below 1150 basis points would be required to suggest a more sanguine attitude toward the country's debt.

Spreads for just about every other country have compressed following the ECB's massive liquidity injection suggesting the banking sector is differentiating between countries most at risk of default or requiring additional help in the form of an additional bailout.

The Dow Jones Euro Stoxx Banks Index rallied to test the 120 area by early February, which now coincides with the 200-day MA. It continues to at least pause, albeit with a downward bias, below that level. The Index pulled back rather sharply yesterday. A sustained move above 120 will be required to suggest demand is returning to dominance beyond the short term and to defray potential for a further test of underlying trading.

Following a deep decline in Q3 last year, the Dow Jones Euro Stoxx 50 Index found support in the region of the 2009 low. It has held a progression of higher reaction lows since October but the short-term rally from early this year had lost momentum over the last month. Yesterday's downward dynamic was the largest since November and suggests that a peak of at least near-term significance has been reached. The Index will need to find support above 2200 if potential for additional higher to lateral ranging is to be given the benefit of the doubt.