LONDON (Reuters) - A credit derivatives committee has been asked to rule whether a ‘failure to pay’ credit event has been triggered by Zambia, paving the way for a potential payout for holders of default insurance on the country’s sovereign debt.
The EMEA Credit Derivatives Determinations Committee was asked the question after the government failed to pay a $42.5 million coupon at the expiry of the grace period on Friday, according to a post on its website on Monday.
Confirmation of a ‘failure to pay’ credit event would move holders of default insurance on Zambia’s sovereign debt closer to collecting payouts.
Credit default swaps (CDS) allow investors to insure the bonds they own against default and can also be used to bet against a particular sovereign’s debt.
Reporting by Tom Arnold; Editing by Catherine Evans
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