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Hello IN×39’m Edmund Parker, and I'm globalco-head of derivatives and structured products at Mayor Brown our credit derivatives episode today follows on from my earlier piece the 2014 is decrepit derivatives definitions a new world and the path to here these episodes the first in a five-part credit derivative mini-series with each part covering a finer aspect of the 2014definitions in greater detail today were covering the government intervention credit events financial reference entity terms and the related asset package delivery provisions the subsequent part sin our series will cover restructuring followed by the success of provisions then sovereigns and finally currencyredenomination reference obligations another changes so firstly lets commence with the government intervention credit event financial reference entity term sand acid package delivery terms I think that the 2003 credit derivative definitions are one of the best and cleverest pieces of legal work ever but what those drafting did not have the benefit of was a crystal ball had one been available they might have seen the following in 2013 fourth largest Dutch bank SNS royale NV was nationalized dafter losses on its real estate portfolio brought it close to toppling in addition to the bank share as the bank subordinated bonds were also expropriated as part of a government bail in unfortunately expropriation didn't fall cleanly into any of the available credit events bankruptcy didn't work there wasn't insolvency and none of the lists of insolvency like circumstances listed in the bankruptcy credit event definition worked failure to pay didn't#39’t work either there had been no payment default the subordinated bonds had been confiscated from hot their holders but they stillexistedrestructuring would have seemed like likely credit event, but there had been no reduction in interest or principal or even a postponement or deferral a change in ranking or a change in currency at least that is at first look the obligation acceleration obligation default credit events did not apply either as an acceleration or default was required and the subordinated bonds had not defaulted they had just been taken finally for the repudiation moratorium credit event to apply they would need Mohave been a repudiation or similar of the bonds and/or a moratorium or similar event which was accompanied by a failure to pay and there was no failure to pay some of these events could have occurred later on of course however with the Dutch government by that point the sole holder it could arrange for the amendment of the terms of the affected bonds such that none of the potential credit events would apply even restructuring which would have needed multiple holders might not have worked so bondholders who had bought credit protection with CVS and lost their bonds could have found that they were bonded×39;less and their credit protectionuselessfortunately SNS was not a widely traded reference entity, although the...
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