Standard confirmation for preferred CDS hammered out

Eight dealers have agreed upon standard documentation for preferred credit default swap (CDS) transactions. The new standards will likely enhance liquidity of the nascent market.

While similar to senior unsecured credit default swaps, these products include a fourth credit event – the deferral of a preferred or hybrid security coupon or a preferred stock dividend.

Defining the deliverable security had been an area of contention, but under the new standards, preferred-level securities will be the only additional deliverable obligation. Previously, the deliverable was a preferred security or anything higher in the capital structure.

The eight dealers are Bear Stearns, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers and Merrill Lynch.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here