Template:Isda Designated Event summ

Designated Event is part of the definition of Credit Event Upon Merger in the 2002 ISDA, and doesn't have an equivalent in the 1992 ISDA. These are mainly those merger type activities that no-one has ever managed to conveniently label including consolidation, amalgamation, merger, whole-business transfers, reorganisation]], reincorporation or reconstitution, or taking control of the company, or changing its capital structure — including creating indebtedness...

Say what?

But issuing indebtedness though?

Question is how significant a debt issuance would it have to be to be a material change in the company’s capital structure?

Some learned commentators feel this is rather harsh, especially if you’re in the finance game, where raising indebtedness is part of what you do. Arguably, a bank deposit is a form of indebtedness. Loosely, so is any negative credit exposure. Likewise, the stricture applies to all Credit Support Providers and Specified Entities, so woe betide if one of those is a financial institution too.

The pragmatist might well say, “yeah, that’s how it reads, but no one would ever take the point right?” While it’s bracing to hear such an expression of trust and confidence in the bona fides of ones fellow merchant in the markets, just “trusting one other” is not really the vibe of the international derivatives documentation community, and in any case if no one needs this clause, why write it in?

See also

• all or substantially all