Bond dealers, investment firms to rule on Sharp's credit swaps

New York

BOND dealers and investment firms will rule on whether buyers of derivatives protecting against a default by Sharp Corp will receive payouts after the electronics maker amended loan terms, putting attention again on how Wall Street-born swap agreements work in Japan.

The International Swaps & Derivatives Association (ISDA) said that its determinations committee has accepted a request to decide whether a so-called restructuring credit event occurred, according to its website. A market participant had submitted a request on April 4 after the Japanese electronics company reached a deal with lenders Bank of Tokyo-Mitsubishi UFJ Ltd and Mizuho Bank Ltd to lower borrowing costs, and extended the term of a 510 billion yen (S$6.4 billion) syndicated loan.