Credit Support Document - ISDA Provision: Difference between revisions

From The Jolly Contrarian
Jump to navigation Jump to search
No edit summary
No edit summary
 
(13 intermediate revisions by the same user not shown)
Line 1: Line 1:
Being the document by which {{isdaprov|Credit Support}} is provided by a {{isdaprov|Credit Support Provider}}.
{{isdamanual|Credit Support Document}}
 
Note that a {{tag|CSA}} should '''not''' be treated as a {{isdaprov|Credit Support Document}}, as it is in fact a {{isdaprov|Transaction}} under the {{isdama}}.
 
Note also the pitfalls of providing [[Guarantee]]s with respect to individual {{isdaprov|Transaction}}s under an {{isdama}}. It doesn't work. [[Guarantee|Here's why]].
 
==[[Guarantees]] under the {{isdama}} and why a Transaction-Specific guarantee is a bad idea==
Should a client request a transaction-specific parental guarantee under an {{isdama}} instead of the usual “all obligations” guarantee of all obligations under the {{isdama}} and all transactions under it, escalate immediately.
 
We should *never* agree to the {{isdaprov|guarantee}} of individual {{isdaprov|Transaction}}s (or accepting [[letter of credit|Letters of Credit]] with respect to individual {{isdaprov|transactions}}) under an {{isdama}}. The reason relates to the way {{isdama}}s are closed out inder Section {{isdaprov|6(e)}}:
 
{{box|{{isdaq|6(e)(i)|2002}}}}
 
*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 the single Early Termination Payment is payable under {{isdaprov|6(e)}} ({{isdaprov|Payments on Early Termination}}) of the {{isdama}}.
 
*That is to say, it is *not* payable under the {{isdaprov|Transaction}} at all - it's payable under the {{isdama}} itself.
 
*Therefore, if the guarantee relates to the single {{isdaprov|Transaction}} only, at precisely the point you wish to rely on it (i.e., upon the party’s default), it will vanish. Same goes for Letters of Credit.
 
{{isdaanatomy}}
 
 
{{isdaanatomy}}

Latest revision as of 10:38, 24 May 2023

2002 ISDA Master Agreement

A Jolly Contrarian owner’s manual™

Credit Support Document in a Nutshell

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.

Credit Support Document in all its glory

Credit Support Document” means any agreement or instrument that is specified as such in this Agreement.

Related agreements and comparisons

Click here for the text of Section Credit Support Document in the 1992 ISDA
Click to compare this section in the 1992 ISDA and 2002 ISDA.

Resources and Navigation

This provision in the 1992

Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project
Navigation Preamble | 1(a) (b) (c) | 2(a) (b) (c) (d) | 3(a) (b) (c) (d) (e) (f) (g) | 4(a) (b) (c) (d) (e) | 55(a) Events of Default: 5(a)(i) Failure to Pay or Deliver 5(a)(ii) Breach of Agreement 5(a)(iii) Credit Support Default 5(a)(iv) Misrepresentation 5(a)(v) Default Under Specified Transaction 5(a)(vi) Cross Default 5(a)(vii) Bankruptcy 5(a)(viii) Merger Without Assumption 5(b) Termination Events: 5(b)(i) Illegality 5(b)(ii) Force Majeure Event 5(b)(iii) Tax Event 5(b)(iv) Tax Event Upon Merger 5(b)(v) Credit Event Upon Merger 5(b)(vi) Additional Termination Event (c) (d) (e) | 6(a) (b) (c) (d) (e) (f) | 7 | 8(a) (b) (c) (d) | 9(a) (b) (c) (d) (e) (f) (g) (h) | 10 | 11 | 12(a) (b) | 13(a) (b) (c) (d) | 14 |

Index: Click to expand:

Overview

edit

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”.

Summary

edit

Being the document by which Credit Support is provided by a Credit Support Provider.

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 👇
  • The JC’s famous Nutshell summary of this clause
  • Is the English law CSA a Credit Support Document, and if not why not?
  • Is the New York law CSA a Credit Support Document, and if so, why AND SERIOUSLY HOW CAN THEY BE DIFFERENT?
  • Hang on does the English Law Credit Support Deed have a different “Credit Support Document” status to an English Law Credit Support Annex? WHAT?

So much ninjery.

edit

See also

edit

References