medium · Corporate Credit Analysis

How does the 'Restructuring' credit event in a standard Credit Default Swap (CDS) relate to cross-default provisions?

1. Cross-default clauses are prohibited in CDS-referenced indentures.
2. A 'Restructuring' event is the same as a cross-default trigger.
3. A cross-default on a bond will almost always trigger a CDS payout.
4. A borrower may execute a distressed exchange (Restructuring) to avoid a payment default that would trip cross-default clauses.

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