Which of the following is not a credit event under ISDA definitions?

Which of the following is not a credit event under ISDA definitions?
A . Restructuring
B . Obligation accelerations
C . Rating downgrade
D . Failure to pay

View Answer

Answer: C

Explanation:

According to ISDA, a credit event is an event linked to the deteriorating credit worthiness of an underlying reference entity in a credit derivative. The occurrence of a credit event usually triggers full or partial termination of the transaction and a payment from protection seller to protection buyer. Credit events include

– bankruptcy,

– failure to pay,

– restructuring,

– obligation acceleration,

– obligation default and

-repudiation/moratorium.

A rating downgrade is not a credit event.