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Deliverable Obligations

If Physical Settlement is applicable, Obligations that could be delivered are:

  • the Reference Obligation or any specified obligation
  • Any Obligations that fulfil certain criteria set out in Section 2.20 and satisfy certain conditions discussed below

Deliverable Obligation other than the Reference Obligation must:

  • be payable in any amount equal to its outstanding principal balance
  • not be conditional, i.e. subject to any counterclaim, defence or set-off by the Reference Entity

Where the Obligation is a guarantee (but not a guarantee issued for the benefit of a ‘downstream’ affiliate), the seller must be able to immediately demand on the guarantee and the demand shall not be subject to first accelerating the guaranteed obligations.

In addition, the parties may also specified the ‘categories’ and ‘characteristic’ of the Deliverable Obligation.

The categories that may be specified include Payment, Borrowed Money, Reference Obligations Only, Bond, Loan, Bond or Loan, each as defined in Section 2.19(a).

The characteristics that may be specified include Not Subordinated, Specified Currency, Not Sovereign Lender, Not Domestic Currency, Not Domestic Law, Listed, Not Contingent, Not Domestic Issuance, Assignable Loan, Consent Required Loan, Direct Loan Participation, Transferable, Maximum Maturity, Accelerated or Matured and Not Bearer.

The above notes are intended to provide only general outlines and should be read in conjunction with, and are qualified in their entirety by, the full provisions of the relevant ISDA provisions and definitions. They should never be used in place of professional advice. We accept no responsibility for any loss arising from any action taken or not taken by anyone using this material or using this material in conjunction with any ISDA documentation in reliance thereof.

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