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FIGCovered Bonds

Collateral posting is needed in swaps says Fitch

Providing collateral with a substantial cushion remains an important remedy to cross currency swap counterparty ineligibility, said Fitch in a note to clients on Wednesday. If collateral is not posted, the issuer becomes exposed to jump-to-default risk, and it can become impossible to replace or novate the swap in a timely manner, which would leave noteholders exposed to potential losses.

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