S&P Downgrade Clause Samples
The S&P Downgrade clause establishes specific consequences or actions that must be taken if a party's credit rating, as assigned by Standard & Poor's (S&P), falls below a predetermined threshold. Typically, this clause applies to financial agreements where the creditworthiness of a party is crucial, such as loan contracts or bond indentures; for example, if a borrower's S&P rating drops below investment grade, the lender may require additional collateral or the right to accelerate repayment. The core function of this clause is to protect the non-downgraded party from increased credit risk by providing mechanisms to respond proactively to deteriorating credit conditions.
S&P Downgrade. In the event that the Joint Probability is reduced below AA- in the case of S&P, the Counterparty shall promptly notify the Trust (and any permitted assignee or transferee of the Trust) and GMAC of such event and (unless, within thirty (30) days after such reduction, the applicable Rating Agency has reconfirmed the ratings of the Reference Notes and the Other Securities that were in effect immediately prior to such reduction) the Counterparty shall within thirty (30) days of receipt of notice of such reduction, with the prior written confirmation of the applicable Rating Agency that such arrangement will not result in the reduction of the rating of any of the Reference Notes or the Other Securities existing immediately prior to the reduction of the applicable Joint Probability, either:
(1) (x) obtain a substitute swap provider (the "Substitute Swap Provider") acceptable to the Trust, such acceptance to be deemed to exist unless the Indenture Trustee provides a basis for objection to such Substitute Swap Provider within two (2) Business Days of receipt of notice from the Counterparty, and replace this Transaction with a swap transaction on substantially similar terms or with such other amendments as consented to in writing by the Trust (which consent shall not be unreasonably withheld), provided such replacement would result in an S&P Joint Probability of at least AA-, except that such Substitute Swap Provider shall thenceforth be the "Counterparty" hereunder; or (y) replace, with the consent of the then-current Offsetting Counterparty, the swap transaction with the then-current Offsetting Counterparty with a swap transaction with a replacement Offsetting Counterparty or enter into a swap transaction with another party such that such party shall be acting as an intermediary between the Counterparty and the then-current Offsetting Counterparty (such replacement or intermediary being the "Replacement Offsetting Counterparty"), in either case on terms approved by the Rating Agencies; or
(2) enter into an ISDA Credit Support Annex ("CSA") with the Trust mutually acceptable to the Trust and the Counterparty and, if the Counterparty is required to post collateral pursuant to such CSA, at the time such CSA is entered into, the Counterparty shall request its legal counsel to deliver to each applicable Rating Agency an opinion as to the enforceability thereof; or
(3) enter into such other credit support arrangements acceptable to the applicable Rating Agency to assu...
S&P Downgrade. If and for so long as the Notes are downgraded by S&P and as a result are rated below AA+ by S&P for reasons other than Party A's failure to perform under this agreement or failure to comply with the requirements of the S&P Criteria (as defined in the Credit Support Annex) with respect to swap counterparties (and, for the avoidance of doubt, Party A has performed its obligations and has complied with all the requirements of such criteria at such time), reference to the relevant S&P rating triggers in Part 5(f)(i)(x) and (y) shall be deemed instead to refer to the corresponding S&P rating triggers which are required pursuant to and in accordance with Table 4 of the S&P Criteria to support a maximum potential rating equal to the then current rating of the Notes, provided that, if at any time circumstances change and/or all required actions or steps have been taken by all relevant parties other than Party A which would result in the Notes being upgraded to a rating above the then current rating of the Notes (the "Potential Reinstated Rating"), references to the relevant S&P rating triggers in Part 5(f)(i)(x) and (y) shall be deemed to refer to the corresponding S&P rating triggers required pursuant to and in accordance with Table 4 of the S&P Criteria to support a maximum potential rating equal to the Potential Reinstated Rating.
S&P Downgrade. Either (1)
(a) An S&P Second Trigger Ratings Event has occurred and is continuing, (b) 10 Local Business Days or more have elapsed since such S&P Second Trigger Ratings Event first occurred, and (c) Party A has failed to comply with or perform any obligation to be complied with or performed by Party A in accordance with the Credit Support Annex or (2) An S&P Second Trigger Ratings Event has occurred and is continuing and 60 calendar days or more have elapsed since such S&P Second Trigger Ratings Event first occurred.
S&P Downgrade. (1) If a Ratings Event I (as defined below) shall occur and be continuing with respect to Party A, (A) then Party A shall, within 10 Local Business Days of such Ratings Event I give written notice to Party B of the occurrence of such Ratings Event I and (B) if Party A fails, within 30 days, to cause one of the following to occur: (i) post Eligible Collateral according to the terms of the 1994 ISDA Credit Support Annex to this Schedule, (ii) furnish an Eligible Guarantee (as defined below) of Party A’s obligations under this Agreement that is subject to the satisfaction of the Rating Agency Condition from a guarantor that has the S&P Required Ratings, or (iii) to obtain an Eligible Replacement; provided, however, that Party A’s obligations to post Eligible Collateral or to furnish an Eligible Guarantee or to obtain an Eligible Replacement shall remain in effect only for so long as a Ratings Event I is continuing with respect to Party A. For the purpose of this Part 1(n)(iv), a “Ratings Event I” shall occur with respect to Party A if the long-term and short-term senior unsecured deposit ratings of Party A cease to be rated at least A and A-1 by Standard & Poor’s Ratings Service or any successor thereto (“S&P”), to the extent such obligations are rated by S&P, or if there is no short-term rating assigned by S&P with respect to Party A, the long-term senior unsecured deposit rating of Party A ceases to be rated at least A+.