The typical term of a CDS contract is five years, although in the case of an over the counter derivative almost any maturity is possible.
CDS contract typically includes a reference entity, which is the company who has issued some debt in the form of a reference obligation, usually a corporate bond. The period over which default protection extends is defined by the contract effective date and termination date. The contract nominates a calculation agent whose role is to determine when a credit event has occurred and also the amount of the payment that will be made in such an event. Another clause in a CDS contract is the restructuring, which determines what restructuring of the reference entity's debt will trigger a credit event. For example, a company that is experiencing financial trouble may decide to extend the maturity of its bonds and therefore defer its payments. Depending on the restructuring specified in a CDS this may or may not trigger a credit event. Generally a contract that is more lax in its criteria for default is more risky and therefore more expensive. Another factor that affects the quote on a CDS contract is the debt seniority of the reference obligation. In the event of a company becoming bankrupt bonds that are issued as senior debt are more likely to be paid back than bonds issued as subordinated, or junior debt, hence junior debt trades at a greater credit spread than senior debt.
Sellers of CDS contracts will give a par quote for a given reference entity, seniority, maturity and restructuring e.g. A seller of CDS contracts may quote the premium on a five-year CDS contract on Ford Motor Company senior debt with modified restructuring...
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