ISDA®
INTERNATIONAL SWAPS AND DERIVATIVES
ASSOCIATION, INC
NEWS RELEASE
For Immediate Release Monday, July 30, 2007
For More Information, Please Contact:
Carmen Neumann, ISDA London, 0203 088 3554; cneumann@isda.org
Scott Marra, ISDA New York, 212-901-6013, smarra@isda.org
ISDA Publishes European Loan Only CDS Document
LONDON, Monday, July 30, 2007
- The International Swaps and Derivatives Association (ISDA) has today announced
the launch of a documentation template for credit default swaps referencing
European leveraged loans.
The ISDA Standard Terms Supplement for Use with Credit Derivative Transactions
on Leveraged Loans is designed to document credit default swap transactions
where the reference obligation and the deliverable obligation are a European
syndicated secured loan. The form is primarily intended for use in the European
market.
ISDA has previously published a documentation template for credit default
swaps referencing U.S. leveraged loans. The European form differs in several
respects from the form published for the U.S. market, reflecting the different
market environments. For example, while the U.S. form is a reference entity-based
contract, the European form is a Reference Obligation-based contract in that
it refers to a specific credit agreement rather than all loans of a particular
reference entity. Another difference is that the European contract relies
on determinations made by the calculation agent, rather than by reference
to a trading standard determined by dealer polls.
Even though it relates to a specific credit agreement, the European contract
is structured so that it will continue after the refinancing of the reference
obligation, referencing instead the new loan (or loans) that refinanced the
original reference obligation. The parties may, however, elect when they enter
into the Loan CDS transaction that the contract will cancel if a refinancing
occurs.
“Volumes continue to grow in U.S. loan CDS, based on standardized documentation
produced by ISDA for single-name and index trading. We believe that the publication
of this standard document will provide the necessary stimulus for similar
success in Europe,” said Robert Pickel, Executive Director and Chief Executive
Officer, ISDA. “It is noteworthy that the market continues to look to ISDA
to provide leadership in this arena.”
ISDA will undertake educational efforts in relation to the new document over
the coming weeks.
The European LCDS template is available at ISDA’s website (www.isda.org).
About ISDA
ISDA, which represents participants in the privately negotiated derivatives industry, is among the world’s largest global financial trade associations as measured by number of member firms. ISDA was chartered in 1985, and today has over 800 member institutions from 54 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.