Credit Event

This Issue in United States

Concept of Credit Event in Futures Trading

In this context of financial law, the following is a definition of Credit Event: An event such as a debt default or bankruptcy that will affect the payoff on a credit derivative, as defined in the derivative agreement.

Credit Event

Concept of Credit Event in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): An event linked to the deteriorating credit worthiness of an underlying reference entity in a credit derivative. The occurrence of a credit event usually triggers full or partial termination of the transaction and a payment from protection seller to protection buyer. Credit events include bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default and repudiation/moratorium.

Resources

See Also

• Derivatives Contract