Discussions regarding loan-deliverable credit default swaps continued last week as the group of dealers and buysiders working on developing a framework and ground rules for the product met again. High on the list for discussion was firming up a standard agreement on how to deliver a loan following a credit event. The group has decided on physical settlement. It also discussed the role market players will play in the LCDS market.
The group had been aiming to have a draft ready to present to the ratings agencies, the International Swaps and Derivatives Association and The Loan Syndications and Trading Association by the end of January, but that date has been pushed back. It will meet again Feb. 7 and members of the group are hopeful to have a document ready to present to those groups by mid-March.