2019 Narrowly Tailored Credit Event Supplement to the 2014 ISDA Credit Derivatives Definitions

2019 Narrowly Tailored Credit Event Supplement to the 2014 ISDA Credit Derivatives Definitions

(published July 15, 2019)

The NTCE Supplement contains amendments to the 2014 ISDA Credit Derivatives Definitions addressing 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. The supplement amends the definitions of “Outstanding Principal Balance” and “Failure to Pay” in the 2014 Definitions, and adds a guidance memo on the interpretation of the Failure to Pay Definition as a new Exhibit F to the 2014 Definitions.

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