2008 Tembec CDS Protocol
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The 2008 Tembec CDS Protocol (the “Protocol”) relates to settlement issues concerning Tembec Industries Inc. ("Tembec"), a unit of Tembec Inc. that filed a Chapter 15 petition in the United States on September 4, 2008. Tembec is a forest products company that is included in various CDX credit derivative indices and is also the subject of single name trades and other credit derivative transaction types. The purpose of the Protocol is to offer market participants an efficient way to address the settlement issues relating to credit derivative transactions referencing Tembec. The Protocol will offer institutions the ability to amend their documentation for various credit derivatives transactions in order to utilize an auction scheduled for October 2, 2008 to determine the final price for the Tembec loan. Markit Group Limited and Creditex Securities Corp. will administer the auction. The 2008 Tembec CDS Protocol is open to ISDA members and non-members. The Protocol will be open between September 17, 2008 and September 26, 2008. |
CDS Accruals under Tembec, Fannie Mae and Freddie Mac CDS Protocols
The September 22nd payment is expected to work in the same fashion for Lehman. We will add the rebate calculation for Lehman and make the finalized document available on the ISDA website.
Attached please find a sheet that summarizes the relevant accrual and rebate calculations for single name, CDX untranched and CDX tranche transactions that are affected by Tembec, Fannie and Freddie.
Should you have any questions, please contact us.
PLEASE NOTE: THIS PROTOCOL IS CLOSED.
The following documents must be submitted via email to the ISDA office in New York in order to adhere to the 2008 Tembec CDS Protocol:
ISDA will only accept email delivery of Adherence Letters. An Adhering Party is not required to send original Adherence Letters to the ISDA offices. Please submit all Adherence Letters via email to TembecProtocol@isda.org. It is critical that both a scanned, signed Adherence Letter, as well as a scanned, conformed Adherence Letter is submitted. Entities will not be deemed to have adhered to the Protocol until both the signed and conformed Adherence Letters are submitted by email in accordance with the Adherence Period. You are not required to send your original Adherence Letter(s) by mail to ISDA. No other documents are required in order to adhere to the 2008 Tembec CDS Protocol. Supporting documentation, such as board resolutions or a list of authorized signatures, can be provided and will be held in safekeeping by ISDA, but it is not necessary to submit such documents in order to adhere to the Protocol. Access to supporting documentation will only be provided if requested in writing. The Protocol will open for adherence on Wednesday, September 17, 2008. Email address for Delivery of Adherence Letters: Policy Regarding Conformed Copies The most common problem experienced in the adherence process for prior Protocols was the failure to include a conformed copy of the Adherence Letter. We remind parties that a conformed copy, together with a signed copy, must be submitted to ISDA in connection with adherence to the 2008 Tembec CDS Protocol. |
Frequently Asked Questions
| ISDA has prepared this brief summary of frequently asked questions to assist in your consideration of the 2008 Tembec CDS Protocol (the “Tembec Protocol”).
THIS FREQUENTLY ASKED QUESTIONS DOES NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE TEMBEC PROTOCOL. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE TEMBEC PROTOCOL. ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER DOCUMENTATION MAY BE PUT. This Frequently Asked Questions webpage is divided into three sections: (i) questions relating to the submission of Adherence Letters; (ii) questions relating to the election of an entity not to participate in the Tembec Protocol; and (iii) questions relating to the substance of the Tembec Protocol itself. Adherence Letter Submission Process How do I send in my Adherence Letter? The Adherence Letter(s) should be on your institution’s letterhead. Nothing in the form Adherence Letter available on ISDA’s website may be changed with the exception of completing the details of your institutional name, date and signature block. You are not required to send your original Adherence Letter(s) by mail to ISDA. What is a conformed copy? You must also submit an executed, or signed, copy of the Adherence Letter in addition to the conformed copy of the Adherence Letter. ISDA keeps the executed copy of the Adherence Letter for its files and does not share the executed copy with anyone else. Who is an authorized signatory? What if I am an investment or asset manager – how do I complete the signature block? As an alternative, an investment or asset manager may list the specific funds that are adhering to the Protocol, by indicating in the signature block: “Investment/Asset Manager, acting on behalf of the funds and accounts listed below”. Click here for example. Please note that in this case the names of those funds will be publicly disclosed on the ISDA website. Whichever method is used, in order for Physical Settlement Requests to be calculated by Participating Bidders, each such investment/asset manager is required to provide a list of all funds and accounts that it acts on behalf of to each Participating Bidder that has (or whose affiliate has) entered into a Master Agreement with any of those funds or accounts. As provided in paragraph (1) of the Auction Methodology set out in Exhibit 3 of the Tembec Protocol, on the Business Day prior to the Auction Date, the Administrators (Markit and Creditex) will publish a list of the Participating Bidders on their respective websites. In addition, contact details will be available for the Participating Bidders through their Adherence Letters on the ISDA website. Can I change the text of the Adherence Letter? Do I need to reference a DTCC number on the Adherence letter? What are the implications if I do not? Does it cost any money to adhere to the Tembec Protocol? Entities Electing Not to Adhere to the Tembec Protocol If your institution or fund elects not to participate in the Tembec Protocol, then you must bilaterally settle each of your trade(s) with each of your counterparties as such trade(s) relate to Tembec Industries Inc. You will not be able to take advantage of the auction mechanic and should contact your counterparty or counterparties immediately if you do not plan to participate in the Tembec Protocol. Scope of Transaction Coverage Relating to the Tembec Protocol Does adhering to the Tembec Protocol affect other credit derivative transactions? What credit derivative transactions are not affected by adhering to the Tembec Protocol? Auction When is the auction? Cash Settlement Date and Accruals How are accruals calculated? |