Default Rate - ISDA Provision
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Overview
No change between the 1992 ISDA and the 2002 ISDA.
Summary
Default interest is one of those perennial things in finance and is generally a rate higher than the implied funding rate for the period and person in question. You might well ask — though one might, as the JC does, struggle heroically to not go there — whether an arbitrary loading on what ought to be a fair estimate of one’s actual carrying cost is not an unenforceable penalty, but hey, everyone does it.
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- The JC’s famous Nutshell™ summary of this clause
- More on penalties
- The difference between “loss of profit” and “direct loss” (and how, oftentimes, there isn’t much of one)
See also
- Applicable Close-out Rate
- Prior to Early Termination
- Default Interest - 2010 GMSLA
- Default interest - Global Master Repurchase Agreement
- Penalty clause