ISDA®

INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION

NEWS RELEASE

For Immediate Release Thursday, October 18, 2001

For More Information, Please Contact:

Stacy Carey, ISDA New York, (212) 332-1200; Fax (212) 332-1212; scarey@isda.org

ISDA PUBLISHES CONVERTIBLE BOND GUIDANCE

NEW YORK, Thursday, October 18, 2001 – The International Swaps and Derivatives Association (ISDA) today published a memorandum to members on the issue of certain exchangeable or convertible bonds in credit derivative contracts. An opinion prepared by Robin Potts, Queen’s Counsel, was also published. The memorandum to members and the opinion were developed in response to questions from members following the appointment of a railway administrator for Railtrack plc in the United Kingdom. Copies of the Opinion and the memorandum to members are available under the (What’s New) section of ISDA’s web site: www.isda.org.

The memorandum to members states that bonds that are convertible at the option of the bondholder or a trustee on behalf of the bondholders should be deliverable under standard credit derivatives contracts. The memorandum to members has been published in advance of the forthcoming “Supplement Relating to Convertible, Exchangeable or Accreting Obligations”, recently distributed to ISDA’s Credit Derivatives Market Practice Committee, which will deal more extensively with these issues.

The opinion states that an English court is likely to conclude that the Railtrack plc exchangeable bonds are not contingent and therefore constitute a deliverable obligation under the terms of the 1999 ISDA Credit Derivatives Definitions.

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