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Three main definitions of restructuring are used: 1. restructuring (old R), 2. modified restructuring (mod R) and 3. modified modified restructuring (mod mod R).
In addition, credit default swaps written on high yield corporates are usually documented without restructuring.
Dr. KIRIAKOS TOBRAS 2 2012 CDS ID CODE GUIDE : How to read a CDS
Old R
The popular name for restructuring as defined in the 1999 credit derivative definitions. This allows the credit event to be triggered when a debt obligation is restructured, for example, by having interest payments reduced, having its principal amount reduced, having its maturity extended, becoming subordinated to another obligation or having its currency changed. There is no maturity limitation on the kind of obligations that can be delivered following this version of restructuring. Old R is currently used for most emerging market credit default swaps as well as for Japanese credits.
Dr. KIRIAKOS TOBRAS 2 2012 CDS ID CODE GUIDE : How to read a CDS
longest maturity of any restructured bond or loan and 30 months after the restructuring takes place. The maturity limitation feature is designed to reduce the protection buyers option to deliver long-dated bonds that may be trading at a discount to shorter dated debt. The other main feature of mod R is that deliverable obligations must be fully transferable. That is, there must be no restrictions on the type of investors that can hold the obligations, and there must be no requirement for the issuer to give approval for an investor to buy its obligations. (In a distressed situation, a company often prefers its liabilities to be held by passive or sympathetic investors rather than aggressive value investors such as distressed debt hedge funds.) This feature is included because obligations that are less than fully transferable are likely to trade at a discount to those that have full rights attached.
Dr. KIRIAKOS TOBRAS 2 2012 CDS ID CODE GUIDE : How to read a CDS
Dr. KIRIAKOS TOBRAS 2 2012 CDS ID CODE GUIDE : How to read a CDS
Senior Debt
A Senior Debt is frequently issued in the form of senior notes or referred to as senior loans, is debt that takes priority over other unsecured or otherwise more "junior" debt owed by the issuer. Senior debt has greater seniority in the issuer's capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment. Senior debt is often secured by collateral on which the lender has put in place a first lien. Usually this covers all the assets of a corporation and is often used for revolving credit lines. It is the debt that has priority for repayment in a liquidation. It is a class of corporate debt that has priority with respect to interest and principal over other classes of debt and over all classes of equity by the same issuer.
Subordinated Debt
Debt over which senior debt takes priority. In the event of bankruptcy, subordinated debt holders receive payment only after senior debt claims are paid in full. Subordinated debt generally refers to debt securities that have a secondary or lesser claim to the issuer's assets than more senior debt, should the issuer default on its obligations. In fact, there are also levels of subordinated debt, with senior subordinated debt having a higher claim to repayment than junior subordinated debt.
Junior Debt
A class of debt that, in the event of insolvency, is prioritized lower than other classes of debt. The most common kind of junior debt is an unsecured loan, which has no collateral.
Kiriakos Tobras * George Noulas * www.stopspeculators.gr * www.scribd.com/my_document_collections/3477124
Dr. KIRIAKOS TOBRAS 2 2012 CDS ID CODE GUIDE : How to read a CDS
Another kind of junior debt is a secured loan in which another loan has priority on the collateral; a second mortgage is an example of a secured junior debt. This class of debt carries higher risk but also pays higher interest than other classes.