Grace period

An item liable to give a credit officer hot flushes. Most frequently seen in the context of a failure to pay or a bankruptcy event of default in a financing or trading document.

It gets these people so excited because, just when they're ready to hit the kill switch, their lawyers tell them they have to wait. It's like coitus interruptus. A credit office who's hot to trot is quite a sight to behold. Just don't get between him and his cross default trigger finger.

A failure to pay where a grace period hasn't expired may amount to a potential event of default - a sort of murky netherworld of counterparty turpitude where oxygen is in short supply, skies darken and debtors start to go blue.

Places to look for more focused information therefore:

• ISDA failure to pay and bankruptcy