Template:M summ Credit Derivatives 4.5

Note the contraction in scope brought about by the narrowly-tailored credit event annex.

Differences with Section 5(a)(i)

• Threshold: There is a Payment Obligation meaning that the payment has to exceed a threshold. Presumably one indicative of the Reference Entity’s general financial parlousness, but the parties are free to set it where they like. In this regard redolent of Cross Default.
• Agregation: Also like Cross Default, it contemplates an aggregation of multiple failures perhaps under several Obligations. Depending on how constrained your Obligations are — usually more so than Specified Indebtedness, which is usually borrowed money and may even be (unwisely, but still) widened from that.