Template:M summ 2002 ISDA Applicable Close-out Rate: Difference between revisions
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Truly from the {{isia}} file — almost in the [[shoot me]] file. This whole game of pan-dimensional chess, with ''six'' different rates to apply in different circumstances, is all just to work out how to accrue interest on {{isdaprov|Unpaid Amount}}s and {{isdaprov|Early Termination Amount}}s when closing out. You get a strong sense that the pragmatists of {{icds}} — if there are any — had well and truly tuned out and gone to the bar by the the ’squad got to this definition. Looking on the bright side, ''at least it doesn’t mention [[LIBOR]]''.<ref>[[File:Dramatic Chipmunk.png|left|100px|frameless]]Did someone say ''[[LIBOR]]''?</ref> | Truly from the {{isia}} file — almost in the [[shoot me]] file. This whole game of pan-dimensional chess, with ''six'' different rates to apply in different circumstances, is all just to work out how to accrue interest on {{isdaprov|Unpaid Amount}}s and {{isdaprov|Early Termination Amount}}s when closing out. You get a strong sense that the pragmatists of {{icds}} — if there are any — had well and truly tuned out and gone to the bar by the the ’squad got to this definition. Looking on the bright side, ''at least it doesn’t mention [[LIBOR]]''.<ref>[[File:Dramatic Chipmunk.png|left|100px|frameless]]Did someone say ''[[LIBOR]]''?</ref> | ||
An easier way of thinking about it: | |||
====There is an Event of Default==== | |||
If there is an {{isdaprov|Event of Default}} it will be the {{isdaprov|Default Rate}} or the {{isdaprov|Non-default Rate}}, depending on who is paying, whether it is an {{isdaprov|Unpaid Amount}} or an {{isdaprov|Early Termination Amount}}, before or after the {{isdaprov|Early Termination Amount}} payment date. That knocks out a lot of the complexity right there: {{quote| | |||
A {{isdaprov|Defaulting Party}} pays the {{isdaprov|Default Rate}} and a {{isdaprov|Non-defaulting Party}} pays the {{isdaprov|Non-default Rate}}. In all circumstances.}} | |||
====There is not an Event of Default==== | |||
This includes {{isdaprov|Termination Events}} and ''quasi'' {{isdaprov|Termination Events}} — things like {{isdaprov|Force Majeure Event}}s and {{isdaprov|Illegality}} where there is a {{isdaprov|Waiting Period}} or a deferral of some kind. Here it will be | |||
:Until the day the {{isdaprov|Early Termination Amount}} is due (factoring in any {{isdaprov|Waiting Period}}), the {{isdaprov|Applicable Deferral Rate}}, and after that point the {{isdaprov|Termination Rate}}. | |||
Look, I said easi''er'', not eas''y''. You do sense that it could have been quite a lot less convoluted even than this, don’t you. | |||
Revision as of 14:59, 30 May 2023
Truly from the I’m sorry I asked file — almost in the shoot me file. This whole game of pan-dimensional chess, with six different rates to apply in different circumstances, is all just to work out how to accrue interest on Unpaid Amounts and Early Termination Amounts when closing out. You get a strong sense that the pragmatists of ISDA’s crack drafting squad™ — if there are any — had well and truly tuned out and gone to the bar by the the ’squad got to this definition. Looking on the bright side, at least it doesn’t mention LIBOR.[1]
An easier way of thinking about it:
There is an Event of Default
If there is an Event of Default it will be the Default Rate or the Non-default Rate, depending on who is paying, whether it is an Unpaid Amount or an Early Termination Amount, before or after the Early Termination Amount payment date. That knocks out a lot of the complexity right there:
A Defaulting Party pays the Default Rate and a Non-defaulting Party pays the Non-default Rate. In all circumstances.
There is not an Event of Default
This includes Termination Events and quasi Termination Events — things like Force Majeure Events and Illegality where there is a Waiting Period or a deferral of some kind. Here it will be
- Until the day the Early Termination Amount is due (factoring in any Waiting Period), the Applicable Deferral Rate, and after that point the Termination Rate.
Look, I said easier, not easy. You do sense that it could have been quite a lot less convoluted even than this, don’t you.
