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Credit market veterans are all too aware that the determination of CDS credit events is far from straightforward. This can be seen as a weakness of the product, but it is difficult to avoid given the irregularity of bond contracts and the smorgasbord of insolvency laws across different jurisduictions.

The case of Astaldi is a cogent example. A question was put to the ISDA Determinations Committee late last month asking if the Italian construction company’s filing for credit protection constituted a bankruptcy credit event.