Event of default and Event risk: Difference between pages

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An event of default is the event of breaching a loan agreement or other similar agreement
#Refers to the risk of the credit of a borrower deteriorating, due to a change in circumstances.
 
#The risk of adverse effects resulting from events whose source is external to an organisation.
 
The occurrence of an event of default normally expressly permits the lender to accelerate repayment of the amount outstanding on the loan and to cancel any further lending. However, the lender is not obliged to and may choose not to accelerate repayment.
 
Each loan agreement will normally define exactly what constitutes an event of default of that agreement.
 
 
Events of default will generally include:
*any failure to pay interest or capital on a due date,
*any failure to comply with a covenant or breach other obligations under the agreement, and
*any inability to repeat a representation.
 
 
Cross defaults are defaults in one facility that constitutes a default in another.




== See also ==
== See also ==
* [[Acceleration]]
* [[Credit risk]]
* [[Breach of covenant]]
* [[Credit event]]
* [[Covenant]]
* [[Political risk]]
* [[Cross default]]
* [[Climate change: testing the resilience of corporates’ creditworthiness to natural catastrophes]]
* [[Default]]
* [[Financial covenant]]
* [[Grace period]]
* [[Loan agreement]]
* [[Material adverse change]]
* [[Representations and warranties]]
* [[Waiver]]
* [[Putting a limit on losses]]
 
[[Category:Compliance_and_audit]]
[[Category:Identify_and_assess_risks]]

Revision as of 12:44, 12 November 2015

  1. Refers to the risk of the credit of a borrower deteriorating, due to a change in circumstances.
  2. The risk of adverse effects resulting from events whose source is external to an organisation.


See also