Isda has also sought to clarify what constitutes credit events such as a bankruptcy or insolvency. The supplement amends the language so that only an admission in a judicial, regulatory or administrative proceeding would constitute a credit event trigger. Statements made in other contexts are considered to be a less reliable indication of deterioration in credit quality.
The final issue relates to the ruling in the original document that stated that any change in the currency or composition of a payment of interest or principal is considered to be a credit event trigger. The supplement modifies this so that a change to a ‘permitted currency’ – the currency of a G7 country or a country that has a ‘AAA’ credit rating from a reputable rating agency – does not constitute a restructuring credit event.