One Year Ago In Derivatives Week

A draft of the new loan-only credit default swap, with the cancelability option removed, was handed to the International Swaps and Derivatives Association, for a road test. It was expected to be launched before 2009, but was delayed due to market volatility and debate about what to do with repaid reference obligations that orphaned the contracts and succession events, where the underlying could be assumed by another entity. [In June, further questions surfaced about whether debtor-in-possession loans should be deliverable in an auction, and whether the ISDA Determinations Committee could be challenged on its list of deliverables for a defaulted name (DW Online, 6/30). The bullet LCDS has still not been unveiled, but the DIP issue is believed to have been resolved.]