NEW YORK — Credit-default swaps traders in Tokyo will meet next week to discuss whether private corporate debt restructuring talks, which roiled contracts protecting against a default by Aiful Corp., should trigger payouts to swaps buyers.
The International Swaps and Derivatives Association said Wednesday that the group is assessing whether Japan's alternative dispute resolution process for companies restructuring their debt triggers a so-called credit event that would lead to payouts. ISDA will hold a forum for members and counsel next week to "discuss views" on the matter, ISDA General Counsel David Geen said Thursday.
The review was triggered by a dispute surrounding credit swaps on Aiful. After the Kyoto-based consumer lender entered alternative dispute resolution talks in September, a committee of 15 dealers and investors that determines when the swaps are triggered rejected three attempts to get payouts from contracts on the company's debt even as one bank said Aiful ceased making loan payments.