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| {{fullanat|isda|Credit Support Document |2002}} | | {{nman|isda|2002|Credit Support Document}} |
| Being the document by which {{isdaprov|Credit Support}} is provided by a {{isdaprov|Credit Support Provider}}.
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| ===The {{csa}} is ''not'' a Credit Support Document===
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| Note that a {{tag|CSA}} is '''not''' a {{isdaprov|Credit Support Document}}, and you should not list it as one in {{isdaprov|Part 4}} of the {{isdaprov|Schedule}}, however satisfying it might be to do so. I mean it sounds like one, right? But no: the counterparty cannot be its own {{isdaprov|Credit Support Provider}}. The {{csa}} is, rather, a {{isdaprov|Transaction}} under the {{isdama}}. This is rather important to the whole issue of [[close-out netting]]. Deep [[ISDA lore]].
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| ===[[Guarantees]] under the {{isdama}}: why {{isdaprov|Transaction}}-specific {{isdaprov|guarantee}}s don't work===
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| {{isdaguaranteewarning}}
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| Should a client request a transaction-specific [[parental guarantee]] under an {{isdama}} instead of the usual [[all obligations guarantee|“all obligations” guarantee]] of all the counterparty’s obligations under the {{isdama}}, hit the alarm button.
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| You should *never* agree to the {{isdaprov|guarantee}} of individual {{isdaprov|Transaction}}s (nor accept a [[letter of credit]] with respect to individual {{isdaprov|Transactions}}) under an {{isdama}}. If you do, because of the way {{isdama}}s are closed out under Section {{isdaprov|6(e)}} — or rather, ''aren't'' closed out, you might find that just when you want your guarantee to pay, the {{isdaprov|Transaction}} it is guaranteeing isn’t there anymore:
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| On a close-out, each {{isdaprov|Transaction}} is terminated, the individual close-out amounts are determined, they’re aggregated up to a single net sum (i.e. negative exposures are netted off against positive ones) and a single {{isdaprov|Close Out Amount}} is payable with respect to ''all terminated {{isdaprov|Transactions}}'' under {{isdaprov|6(e)}} ({{isdaprov|Payments on Early Termination}}) of the {{isdama}}.<ref>The {{isdama}} itself is never actually terminated, but carries impotently on in undead twilight, roaming the badlands like [[Nosferatu]] or the [[Flying Dutchman]], unloved, unredeemed, until the [[end of days]].</ref>
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| *That is to say, it is *not* payable under the {{isdaprov|Transaction}} at all - it’s payable under the {{isdama}} itself.
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| *Therefore, if the [[guarantee]] relates to the single {{isdaprov|Transaction}}, at the point you wish to rely on it (i.e., upon the party’s default), the Transaction has gone, with no payment required. Vanished, like tears in the rain.
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| {{ref}}
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2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual™
Credit Support Document in a Nutshell™
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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.
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Original text
Resources and Navigation
Index: Click ᐅ to expand:
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Comparisons
No changes between the versions of this rather unnecessary definition. The men and women of ISDA’s crack drafting squad™ must have stood back and admired the handiwork of their 1992 forebears, high-fived each other and gone, “nice job, dudes and dudettes”.
Basics
Being the document by which “Credit Support” is provided by a Credit Support Provider.
So one large and oddly baffling question is this:
Is a Credit Support Annex a “Credit Support Document”? It is, right? Isn’t it?
Well, some are, and some aren’t. Here is where JC gets all squirrelly on you. We can say this:
A New York law CSA, being a “security interest” collateral arrangement — say what you will about rehypothecation — is a Credit Support Document.
An English law CSA, being a “title transfer” collateral arrangement, is not a Credit Support Document.
An English law Credit Support Deed, which is a “security interest” collateral arrangement but does not have a rehypothecation right, is ... go on, see if you can guess:
Oh, all right, an English Law Credit Support Deed is a Credit Support Document, too.
If you want to know why this is the case — well, be a sport and stump up for the premium content version and then you can find out!
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👇
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See also
References