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This is what, in the bond world, they call a currency indemnity. It is a part of the boilerplate that is so entrenched, and passeth all understanding, that people seldom ask what it is for ot why it is there. Certainly, do not expect much by way of negotiation on the point, but for the little it is worth, this is what it is all about.

Say I borrow from you in in euros. Being an OG in the international capital markets, my business will truck in incomings in all sorts of currencies. Now, as an OG, I will of course have a sophisticated treasury function which is constantly mindful of my assets, liabilities and obligations, and they will naturally execute such hedges and arrange such facilities so that whenever I need to pay you principal or interest in my loan, I have sufficient euros to do it. That much should not really be a surprise: I borrow in euros, I repay in euros. End of.

All this goes somewhat out the window if I go titten hoch, though. At this point my treasury team would find it hard to execute the necessary hedges and FX conversions, and that is even if they weren’t wandering around outside the building in a daze, woozily clutching Iron Mountain boxes full of gonks, deal toys, tombstones, pilfered stationery and personal effects.

Now the receivers are in, are enforcing security, realising assets, collating cash balances, and these might not, OG, be in euros, right? So there is a disaster scenario we face in which a failed, or failing, debtor, offers up cash in non-contractual currencies, by way of full or partial satisfaction of a debt.

The currency indemnity is the device that, gudgingly, grants that this sort of thing can happen and puts some parameters around what goes down in such a case.