This document contains proposed amendments to the 2014 ISDA Credit Derivatives Definitions to address issues relating to narrowly tailored credit events, focusing on the Outstanding Principal Balance definition.
An ISDA working group comprising members of ISDA’s Credit Steering Committee and additional ISDA members active in the CDS market has been discussing proposals to amend the 2014 ISDA Credit Derivatives Definitions (the “Definitions”) to address issues relating to narrowly tailored credit events (“NTCEs”). NTCEs are arrangements with corporations that cause a credit event leading to settlement of CDS contracts while minimizing the impact on the corporation. ISDA published a statement from its Board of Directors in April 2018 noting concerns with the impact of such events on the efficiency, reliability and fairness of the overall CDS market.
ISDA previously published proposals for changes to the Failure to Pay Credit Event definition and a clarification to the Outstanding Principal Balance (“OPB”) definition. This document contains proposed amendments to the definition of OPB, which are being circulated for feedback. These amendments proposed for implementation together with the earlier proposals.
Capitalized terms used in this memorandum but not defined herein shall have the meaning given to such terms in the Definitions.
Please provide any feedback on the proposals contained herein by Monday June 17, 2019.
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