What happens when the issuer of a bond being used as collateral in a classic repo fails to pay a coupon on the bond during the term of the repo?

Last Updated on January 29, 2022 by Admin 3

What happens when the issuer of a bond being used as collateral in a classic repo fails to pay a coupon on the bond during the term of the repo?

  • The transaction is terminated and the collateral is returned to the seller
  • The transaction is rolled over until the coupon is paid or the issuer becomes insolvent, at which point the seller becomes an unsecured creditor of the issuer
  • The buyer is obliged to make a manufactured payment to the seller and becomes an unsecured creditor of the issuer
  • The buyer is not obliged to make a manufactured payment to the seller but the buyer is likely to ask for margin
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments