ISDA adds provisions for secured bonds

By Jennifer Chiou

New York, June 16 - The International Swaps and Derivatives Association, Inc. announced that secured bonds are now covered by its standard definitions for credit derivatives contracts.

The trade group said that the provisions are intended for use in credit default swap transactions in which the reference entity is a high-yield credit.

ISDA added that the new terminology will allow secured obligations to be used as the reference security - and intends that these should be secured bonds rather than loans. It recently released a template of contracts where the reference instrument is a syndicated secured loan.

New York-based ISDA is a financial trade association which represents the privately negotiated derivatives industry.

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