Specified Indebtedness - ISDA Provision
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Overview
No change to this definition between the 1992 ISDA and the 2002 ISDA. This clause is only really relatable in the context of Cross Default Event of Default, of which it is a component.
Summary
Specified Indebtedness is a simple and innocuous enough provision. Almost redundant, you’d think — why go to the trouble of defining “borrowed money” as another term? (Answer: because many firms, in their wisdom, will wish to change the definition in the Schedule to include derivatives, other trading exposures, things owed to their affiliates, or even any payment obligations of any kind, and for those people, “Specified Indebtedness” is a (somewhat) less loaded term.
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- The JC’s famous Nutshell™ summary of this clause
- Should derivatives be included as “Specified Indebtedness”?
- Would stock loans and repos count as “borrowed money”?
- What about initial margin?
See also
- Cross Default (ISDA Master Agreement)
- Cross default (generally)