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Cross Default - ISDA Provision: Difference between revisions
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Cross Default - ISDA Provision (view source)
Revision as of 16:15, 4 December 2015
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{{isdasnap|5(a)(vi)}} | {{isdasnap|5(a)(vi)}} | ||
{{nuts|2002 ISDA|Specified Indebtedness}} | |||
===The difference between the two formulations=== | ===The difference between the two formulations=== | ||
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This is a seemingly innocuous change intended to clarify a drafting lapse that, for example, of you defaulted on a (relatively small) interest payment on a loan, which then made the whole loan repayable, you could only count the value of the defaulted interest payment to your threshold, when in reality the whole size of the loan is in jeopardy, and really should have been what was counted. It is innocuous, that is, unless you are cavalier enough to include derivatives in your definition of {{isdaprov|Specified Indebtedness}}. But if you do that, you've bought yourself a wild old ride anyway. | This is a seemingly innocuous change intended to clarify a drafting lapse that, for example, of you defaulted on a (relatively small) interest payment on a loan, which then made the whole loan repayable, you could only count the value of the defaulted interest payment to your threshold, when in reality the whole size of the loan is in jeopardy, and really should have been what was counted. It is innocuous, that is, unless you are cavalier enough to include derivatives in your definition of {{isdaprov|Specified Indebtedness}}. But if you do that, you've bought yourself a wild old ride anyway. | ||
The language in the second limb broadly replicates this distinction, but it is most certainly rather attention-sapping drafting. | |||
===General=== | ===General=== | ||