For
Immediate Release Friday, June 16, 2006
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ISDA Publishes
Provisions for Secured Deliverable Obligation Characteristic
The
new provisions allow parties to incorporate language referencing a secured
obligation as a deliverable obligation into the terms of a credit derivatives
contract. The provisions are intended for use in credit default swap transactions
where the reference entity is a high yield credit.
It
is anticipated that the Secured Deliverable Obligation Characteristic will
be primarily relevant in a context where the reference obligation is a secured
bond rather than a loan. Earlier this month, ISDA published a template to
document credit default swap transactions where
the reference obligation is a syndicated secured loan and the deliverable
obligations are also syndicated secured loans.
About ISDA
ISDA, which represents participants in the
privately negotiated derivatives industry, is the largest global financial
trade association, by number of member firms. ISDA was chartered in 1985,
and today has over 700 member institutions
from 50 countries on six continents. These members include most of
the world's major institutions that deal in privately negotiated derivatives,
as well as many of the businesses, governmental entities and other end users
that rely on over-the-counter derivatives to manage efficiently the financial
market risks inherent in their core economic activities.
Information about ISDA and its activities is available on the Association's
web site: www.isda.org.