Problems with credit derivatives: what is a loss event?


Deutsche Bank agreed to pay out on a $10 million credit default swap with Union Bank of Switzerland (UBS) to end a dispute between the two banks caused by the misnaming of a company in the contract document (see Operational Risk, April 2001.

The case underlines how important it is to be precise about the wording of a credit derivative document.

The over-the-counter default swap -- agreed between the two banks in April 2000 -- was intended by UBS as an insurance against default in respect of its

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