The International Swaps and Derivatives Association (ISDA) has today announced the launch of a documentation template for credit default swaps referencing the iTraxx® LevX® index of European leveraged loans, an index administered by Markit Group Limited.
The ISDA iTraxx® LevX® Standard Terms Supplement for Use with Credit Derivative Transactions on Leveraged Loans is designed to document credit default swap transactions where the reference obligation and the deliverable obligation are a European syndicated secured loan listed in the index. The form is primarily intended for use in the European market.
This index version is based on the documentation template for single-name credit default swaps referencing European syndicated secured loans that ISDA published in July 2007. As with the single-name contract, the index version of the contract is structured so that it will continue after the refinancing of the reference obligation, referencing instead the new loan (or loans) that refinanced the original reference obligation.
ISDA also announced today that it has published a revised version of the (single-name) Standard Terms Supplement for Use with Credit Derivative Transactions on Leveraged Loans. This template has been updated to conform with the index version, providing consistency for those entering into single-name loan CDS trades on reference obligations that are listed in the index.
"Volumes continue to grow in loan CDS, based on standardized documentation produced by ISDA for single-name trading. We believe that the publication of this standard document for index trading will provide the necessary stimulus for further growth in Europe, as publication of the index templates did in the US," said David Geen, General Counsel, ISDA.
The European LCDS index template is available at ISDA’s website (http://www.isda.org/).
