An ISDA working group proposed to amend the definition of "Outstanding Principal Balance" in the 2014 Credit Derivatives Definitions to address issues relating to narrowly tailored credit events. The proposal follows a proposal from March 2019 to define the phrase "narrowly tailored credit event" and make changes to the definition of "failure to pay credit event." The new proposal would amend the definition of "Outstanding Principal Balance," which determines the principal amount of a bond or loan that must be delivered to physically settle a CDS contract.
The proposal indicates that changes for existing transactions could be made through an ISDA protocol.
Comments on the proposals must be submitted by June 17, 2019 to the ISDA Legal Department.
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