Dealers trading credit-default swaps on leveraged loans in Europe met Thursday as DW went to press to vote on an important stumbling block to launching an industry-wide document for European LCDS. The issue at stake is whether or not European LCDS contracts should reference a specific loan agreement, or simply a credit entity.
In the U.S., loan-default swap contracts reference the credit entity. In Europe some dealers are standing by the specific loan agreement form because it more closely mirrors the underlying and it makes the derivative more attractive to traditional loan portfolio managers.
Dealers declined to call the vote. There is, however, a desire to clear up the last hurdle to launching a standard document. "We will try to speed things up," said one trading head taking part in the discussions.
