Chapter 4. Credit derivatives documentation and regulations
Flexibility is vital for credit derivatives documentation, which has evolved rapidly. The documentation choices now include original restructuring, modified restructuring and modified-modified restructuring. New Basel rules may facilitate increased trading with no restructuring at all. This chapter sets out the background and some of the issues under discussion and comments on what is needed for the credit derivatives market to thrive in terms of documentation.
Since its foundation in the mid-1990s, the market for credit derivatives has evolved rapidly and grown exponentially. Even as corporate debt default rates have reached historical highs, the growth in the credit default ...