Standard Reference Obligation / Package Observable Bond Resolutions
The 2014 ISDA Credit Derivatives Definitions introduced the new concepts of Standard Reference Obligations and Package Observable Bonds.
Standard Reference Obligation Resolutions
Standard Reference Obligations (“SROs”) are standard published Reference Obligations that can be used in CDS transactions without needing to specify an individual Reference Obligation in the Confirmation. The SRO Administrator (currently S&P Global) maintains and publishes the SRO List, which specifies each current SRO for a specific Reference Entity and Seniority Level. To be considered for publication as an SRO, an obligation must meet specified maturity, size and liquidity thresholds; must have the requisite Seniority Level; and be either deliverable, or not deliverable for the same reasons as an approved benchmark bond, as resolved by the relevant Determinations Committee.
Package Observable Bond Resolutions
Under the terms of the 2014 ISDA Credit Derivatives Definitions, where a Restructuring of certain pre-identified bonds of a Sovereign Reference Entity (referred to as “Package Observable Bonds” or “POBs”) occurs, and a POB is converted into other assets, a protection buyer can use the resulting “Asset Package” to settle the credit event. POBs are contained in a list published by the POB Administrator (currently Markit) and their selection is based on a rules-based process supervised by the Determinations Committees. To qualify as a POB, a bond must meet size, maturity and liquidity thresholds and be deliverable, as resolved by the relevant Determinations Committee.
The SRO/POB Resolutions made by the Determinations Committees to date can be accessed below.