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Amwelladmin (talk | contribs) (Created page with "''Want to quickly convert {{isdaprov|Cross Default}} to {{isdaprov|Cross Acceleration}}? Click '''here'''.''<br> ===General=== {{isdapr...") |
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===General=== | ===General=== | ||
{{isdaprov|Cross Default}} is intended to cover off the unique risks associated with ''lending money to counterparties who have also borrowed heavily from other people''. If you try to apply it to contractual relationships which aren't debtor/creditor in nature — as starry-eyed young [[credit officer]]s in the thrall of the moment like to — it will give cause trouble. This will not stop credit officers doing that. Note also that it is, as are most ISDA provisions, bilateral. If you are a regulated financial institution, the boon of having a {{isdaprov|Cross Default}} right against your counterparty may be a lot smaller than the bane of having given away a {{isdaprov|Cross Default}} right against yourself. | {{isdaprov|Cross Default}} is intended to cover off the unique risks associated with ''lending money to counterparties who have also borrowed heavily from other people''. If you try to apply it to contractual relationships which aren't debtor/creditor in nature — as starry-eyed young [[credit officer]]s in the thrall of the moment like to — it will give cause trouble. This will not stop credit officers doing that. Note also that it is, as are most ISDA provisions, bilateral. If you are a regulated financial institution, the boon of having a {{isdaprov|Cross Default}} right against your counterparty may be a lot smaller than the bane of having given away a {{isdaprov|Cross Default}} right against yourself. | ||
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*a default under a financial agreement that would allow a creditor to [[accelerate]] any [[indebtedness]] that party owes it; | *a default under a financial agreement that would allow a creditor to [[accelerate]] any [[indebtedness]] that party owes it; | ||
*a [[failure to pay]] on the due date under such agreements after the expiry of a [[grace period]]. | *a [[failure to pay]] on the due date under such agreements after the expiry of a [[grace period]]. | ||