Monoline CDS settlement

FT alphaville has a post pointing out the results of an ISDA exercise on CDS written on the monolines. ISDA has investigated both CDS written on the monolines themselves, and on bonds wrapped by them, and come up with what is presumably close to a comprehensive list. At first sight the notionals are a little scary: $134B relating to MBIA for instance. But note that first many of these contracts will net, and secondly many are pay as you go CDS on the underlying ABS, and hence may not be triggered by the default of the insurer. I'm therefore not sure we can necessarily conclude as alphaville does that if there were a credit event (which may be something other than default, remember)

there’s no way they’d all get paid in the timely, efficient and full manner implied on the ISDA CDS tin

Rather I think the right reading is that ISDA is pointing out that if there is a credit event, there will be a lot of work to do for dealers in agreeing settlement prices not just of the monoline's senior debt, but for the wrapped bonds. It is those bonds where there will be a wide range of prices (not least because many of them are illiquid) but at least if the dealers know what is out there, they will be prepared.