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==={{ | ==={{isda92prov|Specified Indebtedness}}=== | ||
{{specified indebtedness capsule| | {{specified indebtedness capsule|isda92prov}} | ||
===Measure of the {{ | ===Measure of the {{isda92prov|Threshold Amount}}=== | ||
*'''{{1992ma}}''': This contemplates default “in an aggregate '''amount'''” exceeding the {{ | *'''{{1992ma}}''': This contemplates default “in an aggregate '''amount'''” exceeding the {{isda92prov|Threshold Amount}} which would justify early termination of the {{isda92prov|Specified Indebtedness}}: that is to say the value of the failed payment, and not the whole principal amount of the {{isda92prov|Specified Indebtedness}} it was owed under, contributes to the {{isda92prov|Threshold Amount}}, ; | ||
*'''{{2002ma}}''': This contemplates an [[event of default]] under agreements whose “'''aggregate principal amount'''” is greater than the Threshold Amount: that is to say it is the ''whole principal amount'' of the agreement which is picked up, not just the amount of the payment. | *'''{{2002ma}}''': This contemplates an [[event of default]] under agreements whose “'''aggregate principal amount'''” is greater than the Threshold Amount: that is to say it is the ''whole principal amount'' of the agreement which is picked up, not just the amount of the payment. | ||
This change, we speculate, is meant to fix a howler of a drafting lapse from {{icds}}: | This change, we speculate, is meant to fix a howler of a drafting lapse from {{icds}}: | ||
*It can be triggered by any [[event of default]], not just a payment default (i.e. the {{1992ma}} requirement for “an {{ | *It can be triggered by any [[event of default]], not just a payment default (i.e. the {{1992ma}} requirement for “an {{isda92prov|Event of Default}} ... ''in an amount equal to...''” impliedly limits the clause to ''payment'' defaults only since other defaults aren't “in an amount”...); | ||
*It captures the whole value of the {{ | *It captures the whole value of the {{isda92prov|Specified Indebtedness}}, not just the value of the default (if it even ''is'' a payment capable of being valued) itself. | ||
For example: if you defaulted on a small interest payment on your {{ | For example: if you defaulted on a small interest payment on your {{isda92prov|Specified Indebtedness}} which made your whole loan repayable, under the {{1992ma}} you could only count the value of that missed interest payment to your {{isda92prov|Threshold Amount}}. But the whole loan is at risk of being accelerated — so this is a much more significant credit deterioration than is implied by the missed payment. | ||
It is innocuous, that is, unless you are cavalier enough to include ''derivatives or other payments which are not debt-like'' in your {{ | It is innocuous, that is, unless you are cavalier enough to include ''derivatives or other payments which are not debt-like'' in your {{isda92prov|Specified Indebtedness}}. But if you do that, you've bought yourself a wild old ride anyway. | ||
Don't say you weren't warned. | Don't say you weren't warned. |