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A credit event occurs when a person or organization defaults on a significant transaction. Because the marketplace recognizes such events as related to one's credit worthiness, credit events can trigger specific protections provided by credit derivatives (e.g. credit default swap, credit default swap index, credit default swap index tranche). The events triggering a credit derivative are defined in a bilateral swap confirmation which is a transactional document that typically refers to an ISDA master agreement previously executed between the two swap counterparties. There are several standard credit events which are typically referred to in credit derivative transactions:
- Bankruptcy
- Failure to Pay
- Restructuring
- Repudiation
- Moratorium
- Obligation Acceleration
- Obligation Default
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