Reference Entity - Credit Derivatives Provision

2014 ISDA Credit Derivatives Definitions A Jolly Contrarian owner’s manual™ 2.1 in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. 2.1 in all its glory Section 2.1 Reference Entity. “Reference Entity” means the entity specified as such in the related Confirmation. Any Successor to the Reference Entity either (a) identified by the Calculation Agent pursuant to Section 2.2 (Provisions for Determining a Successor) on or following the Trade Date, or (b) identified pursuant to a DC Resolution in respect of a Successor Resolution Request Date and publicly announced by the DC Secretary on or following the Trade Date shall, in each case, with effect from the Succession Date, be the Reference Entity for the relevant Credit Derivative Transaction or a New Credit Derivative Transaction (as determined pursuant to such Section 2.2 (Provisions for Determining a Successor)). edit Resources and Navigation Resources (full wikitext) | (nutshell wikitext) | Anatomy | Narrowly-tailored credit event | Equity v credit derivatives showdown Index: Click ᐅ to expand: Credit Derivatives Premium version of this page

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Summary

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The person against whose collapse you are hedging. This will generally be the issuer of a listed debt security — a Bond — or at a pinch, a relatively public syndicated Loan. A straightforward enough notion, complicated by the tendency for corporates to be taken over from time to time. What happens, for example, when Credit Suisse, for some years now a basket case of a credit, with CDS spreads trading widely, becomes such a basket-case that, to stave off Bankruptcy, it is acquired lock, stock and barrel by UBS? Is UBS a Successor, and what should a credit derivative trader, who wisely bought protection on Lucky make of that its sudden return to comparative wellbeing in the arms of its rescuer?

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