Credit Support Provider - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Go premium Overview — Summary — Premium — See also — Wikitext Crosscheck: →’87 equivalent →’92 equivalent →’02 equivalent Credit Support Provider 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. Original text “Credit Support Provider” has the meaning specified in the Schedule. See ISDA Comparison for a comparison between the 1992 ISDA and the 2002 ISDA. The Varieties of ISDA Experience Subject 2002 (wikitext) 1992 (wikitext) 1987 (wikitext) Preamble Pre Pre Pre Interpretation 1 1 1 Obligns/Payment 2 2 2 Representations 3 3 3 Agreements 4 4 4 EODs & Term Events 5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • FM • Tax Event • TEUM • CEUM • ATE 5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM • ATE 5 Events of Default: FTPD • Breach • CSD • Misrep • DUSS • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM Early Termination 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations; Payment Date • Payments on ET • Set-off 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET • Set-off 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET Transfer 7 7 7 Contractual Currency 8 8 8 Miscellaneous 9 9 9 Offices; Multibranch Parties 10 10 10 Expenses 11 11 11 Notices 12 12 12 Governing Law 13 13 13 Definitions 14 14 14 Schedule Schedule Schedule Schedule Termination Provisions Part 1 Part 1 Part 1 Tax Representations Part 2 Part 2 Part 2 Documents for Delivery Part 3 Part 3 Part 3 Miscellaneous Part 4 Part 4 Part 4 Other Provisions Part 5 Part 5 Part 5 Resources and Navigation Index: Click ᐅ to expand: ISDA

Comparisons

The concept dates from the 1992 ISDA — while Credit Support Document got a run out in the 1987 ISDA, Credit Support Document did not — but, we think, the terminology creates far more confusion than it needed to, and maybe the ancient ninja squad of the Eighties was on to something.

Basics

A Credit Support Provider is basically a guarantor: a third party who stands being the obligations of a counterparty to the ISDA Master Agreement. Usually this is someone providing an all obligations guarantee or a standby letter of credit, but on rare occasions — very rare, usually involving espievies — might be a third party directly posting credit support to the other party under a Credit Support Document. In any case it is not a direct counterparty to the ISDA Master Agreement itself, whether or not the CSA counts as a Credit Support Document.

Given that a 1995 CSA is not a Credit Support Document at all, but a Transaction under the ISDA Master Agreement, a party to it is obviously not a Credit Support Provider.

A 1994 NY CSA, on the other hand, is a Credit Support Document though. So should a Party to the ISDA Master Agreement, where there is a 1994 NY CSA, be described as a “Credit Support Provider"?

No, sayeth the User’s Guide to the 1994 NY CSA:

“Parties to an ISDA Master Agreement should not, however, be identified as Credit Support Providers with respect to the Annex, as such term is intended only to apply to third parties.”

the Users’ Guide to the 2002 ISDA is similarly emphatically vague:

“The meaning of “Credit Support Provider” ... should apply to any person or entity (other than either party) providing, or a party to, a Credit Support Document delivered on behalf of a particular party.”

This means that a New York Law CSA — which is not a Transaction under the ISDA architecture, remember, is a Credit Support Document, but the person providing Credit Support under it — is not a “Credit Support Provider”?

Premium content Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics👇 JC’s “nutshell” summary of the clause Background reading and long-form essays The multiple uses of “credit support”: A brief think-piece on whether it really was a good idea to use the same descriptor — “Credit Support” — to describe three things (a guarantor, a collateral framework, and the cash and assets posted under it) which are economically related, but ontologically quite different.

See also

• Credit Support Document