What is a red pair code?
Second, there is the nine-digit RED Pair Code or “RED9 Code” that is a nine-digit code representing a unique reference obligation with a corresponding reference entity. These RED6 Codes are market standards and are deeply embedded in the pre- and post-execution credit trading workflows.
What is reference entity in CDS?
The reference entity can be a corporation, government, or other legal entity that issues debt of any kind. In many cases, the credit derivative that names a reference entity is a credit default swap (CDS).
What is a reference obligation?
A reference obligation is a specially designated debt obligation upon which a credit derivative, such as a credit default swap, is based and is issued by the reference entity. It does not represent all the forms of debt issued by the entity, but only a specific obligation.
What Markit RED?
Markit RED (Reference Entity Database) is the market standard that confirms the legal relationship between reference entities that trade in the credit default swap market and their associated reference obligations, known as “pairs†.
What is a credit swap on mortgages?
The term credit default swap (CDS) refers to a financial derivative that allows an investor to swap or offset their credit risk with that of another investor. To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse the lender in the case the borrower defaults.
What is second obligation under reference?
Answer: A reference obligation is a specially designated debt obligation upon which a credit derivative, such as a credit default swap, is based and is issued by the reference entity. It does not represent all the forms of debt issued by the entity, but only a specific obligation.
What happens when a credit event occurs?
Credit Event Triggers In the CDS world, a credit event is a trigger that causes the buyer of protection to terminate and settle the contract. Credit events are agreed upon when the trade is entered into and are part of the contract.
What are CDS spreads?
The “spread” of a CDS is the annual amount the protection buyer must pay the protection seller over the length of the contract, expressed as a percentage of the notional amount.
What is iTraxx crossover?
The iTraxx Crossover index comprises the 75 most liquid sub-investment grade entities. Total Return indices are calculated and published hourly for iTraxx Europe, Asia and Crossover. These indices measure the performance of the respective on-the-run iTraxx CDS contracts. Asia & Emerging Markets.
How do CDS work?
A certificate of deposit, more commonly known as a CD, is a special type of savings account. You deposit your money into the account and agree not to make any withdrawals for a certain period of time. At the end of that time, you get your money plus whatever was earned in interest back.
What does prior reference mean?
Prior Reference Obligation means the Reference Obligation most recently applicable to the Notes, and otherwise, any unsubordinated Borrowed Money obligation of the Reference Entity.