Random US/China war/default hypothetical
For some reason this hypothetical was keeping me up last night, and I have a feeing answers can be found here..
Suppose the US and China (or any sovereign creditor) become involved in an explicit war. There is no way the US would continue making payments on that countries reserve holdings of treasuries (>3tr in China's case). Would this qualify as a technical default, and trigger payment on CDS contracts?
For the record, I'm not saying this is even remotely possible, but was just wondering if any "explicit war" covenants are present in sovereign debt issuances... any takers?
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