Noble Group Limited

Question:

Following the dismissal by the Asia Ex-Japan DC of the question relating to Noble Group Limited (Issue Number: 2017061901) on 9 August 2017 and the lack of sufficient public information (or information that can be made public) for the DC to make a determination on the Credit Event question itself (in particular, the absence of the underlying documentation in respect of the Borrowing Base Facility (and amendments thereto)) and Noble Group Limited’s guarantee in respect thereof (together, the “Unavailable Documentation”) which the DC explained in its DC Statement of 10 August 2017, various Credit Event Notices have been served in the market with respect to Noble Group Limited.   

For the purposes of:

-          interpreting the standard in Section 1.32 that a "Credit Event Notice must contain a description in reasonable detail of the facts relevant to the determination that a Credit Event has occurred", and

-          interpreting and assessing the requirements in Section 4.7 that the event in (i) to (iv) is "with respect to one or more Obligations and in relation to an aggregate amount of not less than the Default Requirement" and "not expressly provided for under the terms of such Obligation",

is a Credit Event Notice, delivered on or prior to 4pm London time on 23 August 2017, valid (and therefore will settlement obligations apply with respect thereto), if that Credit Event Notice indicates a Restructuring Credit Event on Noble Group Limited without the Unavailable Documentation, or without further relevant evidence (evidence unavailable to the DC) confirming the occurrence of a Restructuring Credit Event with respect to an Obligation of Noble Group Limited? 

Additional Information Provided by Question Submitter:

Paragraph 3.8(b) of the DC Rules permits a Committee to pass a DC Resolution in respect of matters of contractual interpretation relevant to the credit derivatives market generally. Following the dismissal by the Determinations Committee of the question relating to Noble Group Limited (Has a Restructuring Credit Event occurred with respect to Noble Group Limited? Issue Number: 2017061901) on 9 August 2017, there is a great deal of uncertainty as to the appropriate contractual interpretation of the requirements of Sections 1.32 (Credit Event Notice) and 4.7(a) (Restructuring Credit Event) in order to serve a valid Credit Event Notice. In order for a Credit Event Notice to be valid it must satisfy the requirements of Section 1.32, which requires a "description in reasonable detail of the facts relevant to the determination that a Credit Event has occurred". In addition, Section 4.7(a) requires that the event in (i) to (iv) is "with respect to one or more Obligations" (which in turn must satisfy the selected Obligation Category and Obligation Characteristics of the relevant credit derivative transaction) and that the event "is not expressly provided for under the terms of such Obligation".

Therefore, in order to constitute a valid Credit Event Notice, would it be necessary for the Buyer to provide the underlying documentation? This question as to the standard in Section 1.32 is more pronounced given that separately there can never be sufficient Publicly Available Information to confirm the occurrence of each of the elements of the Restructuring Credit Event given the proviso of Section 1.35. We note that DC Statement 08102017 resolved to dismiss the Restructuring Credit Event DC Question on the basis that the AEJ DC was not able to obtain the underlying documentation in respect of the Borrowing Base Facility (and amendments thereto) and Noble Group Limited’s guarantee in respect thereof and was unable to determine whether an "Obligation" of the Reference Entity had been restructured in line with Section 4.7. Whilst the Publicly Available Information that accompanied the request to the DC Secretary on 19 June 2017  was sufficient to satisfy the requirements of Section 2.1(b) of the DC Rules, the inability of the AEJ DC to obtain the underlying documentation meant that it did not have sufficient public information to make a determination on the Credit Event DC Question itself. This is the same situation in which Eligible Market Participants are in.  Whilst the dismissal of the DC Question did not constitute a DC Resolution, there is now uncertainty generally as to how to interpret Sections 1.32 and 4.7(a) in the light of the approach and challenges described by the DC Statement when seeking to determine the Credit Event. For the purposes of Section 10.2 of the 2014 ISDA Credit Definitions, we respectfully request a DC Resolution in respect of this question.  This is so that market stability and integrity and safe and efficient derivatives markets can be maintained.  The credit derivatives market now generally requires certainty as to the treatment of Credit Event Notices describing a Restructuring Credit Event relating to Noble Group Limited where no the Unavailable Documentation cannot be obtained or provided. This matter has not been raised in reference to a bilateral dispute between two Eligible Market Participants but in the context of Credit Event Notices being actually now or potentially served throughout the market on a multilateral basis in view of the expiry of the Post Dismissal Additional Period under Section 1.24 of the 2014 ISDA Credit Definitions following the DC Credit Event Question Dismissal on 9 August 2017. Section 2.1(b) of the DC Rules does not apply to this question.