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In a Nutshell™ Section Applicable Deferral Rate:
“Applicable Deferral Rate” means:—
- (a) For Section 9(h)(i)(3)(A) [payments deferred under Section 2(a)(iii)], the market rate actually offered by a major bank in the interbank market for overnight deposits in that currency that the payer chose in good faith;
- (b) For Section 9(h)(i)(3)(B) [payments deferred during a Waiting Period because of an Illegality or Force Majeure] and clause (a)(iii) of Applicable Close-out Rate, the market rate actually offered by a major bank in the interbank market for overnight deposits in that currency that the payer chose in good faith and in consultation with the other party; and
- (c) For Section 9(h)(i)(3)(C) [payments not made after a Waiting Period expires while the Illegality or Force Majeure subsists] and clauses (a)(iv), (b)(i)(3) and (b)(ii)(l) of Applicable Close-out Rate, the average of the rate the payer obtains under (a) above and the annual rate of the payee’s cost of funding of that amount.
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2002 ISDA full text of Section Applicable Deferral Rate:
“Applicable Deferral Rate” means:—
- (a) for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer to be a rate offered to the payer by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market;
- (b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the definition of Applicable Close-out Rate, the rate certified by the relevant payer to be a rate offered to prime banks by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer after consultation with the other party, if practicable, for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; and
- (c) for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv), (b)(i)(3) and (b)(ii)(l) of the definition of Applicable Close-out Rate, a rate equal to the arithmetic mean of the rate determined pursuant to clause (a) above and a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount.
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Click here for the text of Section Applicable Deferral Rate in the 1992 ISDA
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