Isda says S&P got it wrong with definitions criticism

Standard & Poor’s Ratings Services’ criticism last week of a proposed change in credit derivatives documentation language was based on an out-of-date draft, according to an International Swaps and Derivatives Association spokeswoman.

Last week, S&P said it strongly objected to a change in language that would allow for the triggering of credit default swaps contracts where public information that “reasonably supports” the occurrence of a credit event is available.

However, according to the Isda spokeswoman, this language was removed from the most recent drafts, after negative feedback from end-users. “We now include language relevant to a determination that a credit event has occurred, and the publicly available information has to create a reasonable inference that a credit event has occurred,” she told RiskNews.

S&P did not respond to RiskNews’ invitation to comment on the issue. However, it is believed that the ratings agency will issue a new statement within a week regarding credit derivatives documentation language currently being considered by an Isda working group.