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| [[4.5 - Credit Derivatives Provision|Note]] the contraction in scope brought about by the [[narrowly-tailored credit event]] annex. | | [[4.5 - Credit Derivatives Provision|Note]] the contraction in scope brought about by the [[narrowly-tailored credit event]] annex. |
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| ===Differences with Section {{c|Embedded Template}}{{isdaprov|5(a)(i)}}===
| | {{Failure to pay comparison}} |
| *'''Threshold''': There is a {{c|Embedded Template}}{{cddprov|Payment Requirement}} meaning that the payment has to exceed a threshold. Presumably one indicative of the {{c|Embedded Template}}{{cddprov|Reference Entity}}’s general financial parlousness, but the parties are free to set it where they like. In this regard redolent of {{c|Embedded Template}}{{isdaprov|Cross Default}}.
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| *'''Agregation''': Also like {{c|Embedded Template}}{{isdaprov|Cross Default}}, it contemplates an aggregation of multiple failures perhaps under several {{c|Embedded Template}}{{cddprov|Obligations}}. Depending on how constrained your Obligations are — usually more so than {{c|Embedded Template}}{{isdaprov|Specified Indebtedness}}, which is usually [[borrowed money]] and may even be (unwisely, but still) widened from that.
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| *'''No acceleration required ''': Also, like {{c|Embedded Template}}{{isdaprov|Cross Default}} but for different reasons, the holders of the obligation need not have formally ''accelerated'' it. What matters is not the state of the indebtedness, but its ''market value'' should one try to liquidate it in the secondary market. One can have all kinds of practical, commercial and even accounting reasons for not accelerating the moment a payment is missed, but if the failure is ''public'', it will instantly be reflected in the market value of {{c|Embedded Template}}{{cddprov|Reference Entity}}’s public debt obligations, which is the contingency one tries to protect against with credit derivatives.
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