Revisiting the restructuring issue

The rapidly evolving credit default swap market advanced a few steps this month when the International Swaps&Derivatives Association (Isda) reached a breakthrough agreement on restructuring. Its amendment states that when a default swap is triggered by a restructuring event the maximum maturity of the obligations the buyer of protection can deliver to the seller is 30 months.

Since the end of last year the credit default swap market has been plagued by uncertainties over restructuring, so Isda’s conclusion has been eagerly awaited.