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[[Narrowly-traded credit event]] or [[NTCE]] refers to a buried whoopsie in the [[2014 ISDA Credit Derivative Definitions]] that reared its little button nose during a refinancing in 2017 by that scion of the New York Stock Exchange, [[Hovnanian Enterprises]] which intentionally withheld a debt payment to an [[affiliate]] as part of a non-stressy refinancing. Though the [[Reference Entity]] was financially sound and ''able'' to make the payment, its not doing so would technically constitute a [[failure to pay]] — a [[credit event]], by any lights, although a false flag in the context of [[credit derivatives]], which are meant to track credit deterioration. This could trigger the unwind of credit protection, market disruption, panic on the streets and a slew of [[tedious]] [[silver circle law firm|silver circle]] client bulletins<ref>But nowhere near so [[tedious]] as their mountainous bulletins on [[regulatory margin]]. Enough already guys!</ref> | {{g}}[[Narrowly-traded credit event]] or [[NTCE]] refers to a buried whoopsie in the [[2014 ISDA Credit Derivative Definitions]] that reared its little button nose during a refinancing in 2017 by that scion of the New York Stock Exchange, [[Hovnanian Enterprises]] which intentionally withheld a debt payment to an [[affiliate]] as part of a non-stressy refinancing. Though the [[Reference Entity]] was financially sound and ''able'' to make the payment, its not doing so would technically constitute a [[failure to pay]] — a [[credit event]], by any lights, although a false flag in the context of [[credit derivatives]], which are meant to track credit deterioration. This could trigger the unwind of credit protection, market disruption, panic on the streets and a slew of [[tedious]] [[silver circle law firm|silver circle]] client bulletins<ref>But nowhere near so [[tedious]] as their mountainous bulletins on [[regulatory margin]]. Enough already guys!</ref> | ||
The answer was to build into the [[failure to pay]] definition the requirement for “credit deterioration” in the [[2019 Narrowly Tailored Credit Event Supplement to the 2014 ISDA Credit Derivatives Definitions]] which can be retrofitted to older models by means of the [[ISDA 2019 NTCE Protocol]]. Implementation date expected to be 13 January 2020. | The answer was to build into the [[failure to pay]] definition the requirement for “credit deterioration” in the [[2019 Narrowly Tailored Credit Event Supplement to the 2014 ISDA Credit Derivatives Definitions]] which can be retrofitted to older models by means of the [[ISDA 2019 NTCE Protocol]]. Implementation date expected to be 13 January 2020. |