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Amwelladmin (talk | contribs) (Created page with "There’s no need for cross default in ''any'' master trading agreement, actually — this is the JC’s considered view, about which you can read at length elsewh...") |
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There’s no need for [[cross default]] in ''any'' [[master trading agreement]], actually — this is the [[JC]]’s considered view, about which you can read at length elsewhere — but the {{gmsla}} and {{ | There’s no need for [[cross default]] in ''any'' [[master trading agreement]], actually — this is the [[JC]]’s considered view, about which you can read at length elsewhere — but the {{gmsla}} and {{gmra}} are a particularly bad candidates for cross default because their transactions are by definition short term (in the case of {{gmra}}) and on call (in the case of {{gmsla}}), so the “mischief” the [[cross default]] is designed to remedy — large [[credit exposure]] under transactions with long tenor and few regular cash-flows — does not exist. | ||
[[Cross default]], remember, is a banking concept, designed to protect [[Lender|lenders]] who have unsecured credit exposure to [[Borrower|borrowers]] under fixed rate [[Loan|loans]] where the only material payments will be regular [[interest]] payments, which might be as infrequent as quarterly, semi-annual or even annual. If the lender knows the borrower has defaulted on material [[indebtedness]] to another [[lender]], it will not want to wait nine months to see if there is a [[failure to pay]] on its own [[Loan|facility]]. Hence, a [[cross default]] right. | [[Cross default]], remember, is a banking concept, designed to protect [[Lender|lenders]] who have unsecured [[credit exposure]] to [[Borrower|borrowers]] under fixed rate [[Loan|loans]] where the only material payments will be regular [[interest]] payments, which might be as infrequent as quarterly, semi-annual or even annual. If the lender knows the borrower has defaulted on material [[indebtedness]] to another [[lender]], it will not want to wait nine months to see if there is a [[failure to pay]] on its own [[Loan|facility]]. Hence, a [[cross default]] right. | ||
[[SFT - SFTR Provision|SFTRs]] are collateralised daily, so: | [[SFT - SFTR Provision|SFTRs]] are collateralised daily, so: |