0309 greece
The Athens skyline, seen from the Acropolis, on February 20, 2012 in Athens, Greece. Greece has passed one hurdle, but will investors decide the decision to write off the country's debt count as a default? - 

Jeremy Hobson: Greece has passed another do-or-die hurdle. Private investors have agreed to write off about 75 percent of their loans to the country. That deal should clear the way for a second bailout which will allow Greece to avoid a messy default.

That's good for Europe, but it may have consequences in a more obscure market, as Marketplace's Stephen Beard reports from London.

Stephen Beard: When investors buy government bonds, they can take out an insurance policy usually from a bank. They're called credit default swaps. Remember them? They played a starring role the mortgage meltdown.

In this case, if a government defaults, the investor can claim on this insurance and get much if not all of their money back. Today the international body that oversees these policies will decide whether the Greek debt deal is technically a default. Greece says it isn't, because it's mostly voluntary.

But Stephen Lewis of Monument Securities says that would terrify thousands of other government bond holders.

Stephen Lewis: I think investors will wonder under what circumstances any sovereign borrower could be said to have defaulted.

He says it would be like a homeowner suddenly discovering his house is not covered for fire just as the flames get uncomfortably close -- it could hit confidence in a whole range of other government bonds.

In London, I'm Stephen Beard for Marketplace.