Approved Ratings Threshold Clause Samples
The Approved Ratings Threshold clause sets a minimum credit rating standard that counterparties, financial instruments, or service providers must meet to be considered acceptable under an agreement. Typically, this clause references ratings assigned by recognized agencies such as Moody’s, S&P, or Fitch, and may specify that only entities rated above a certain level (for example, BBB or higher) are eligible. By establishing this threshold, the clause helps manage credit risk by ensuring that only sufficiently creditworthy parties or assets are involved, thereby reducing the likelihood of default or financial loss.
Approved Ratings Threshold. Upon the occurrence of a Collateralization Event (as defined below), if Party A has not, within 30 days after such ratings downgrade (unless, within 30 days after such downgrade, each applicable Rating Agency has reconfirmed the rating of the Certificates which was in effect immediately prior to such downgrade (determined without regard to any financial guaranty insurance policy, if applicable), unless the rating of the Certificates were changed due to a circumstance other than the downgrading of Party A's (or its Credit Support Provider’s) rating), complied with one of the four solutions listed below, then an Additional Termination Event shall have occurred with respect to Party A and Party A shall be the sole Affected Party with respect to such Additional Termination Event. In the event that (A) either (i) the unsecured, long-term senior debt obligations of Party A (or its Credit Support Provider) are rated below “A1” by ▇▇▇▇▇'▇ or are rated “A1” by ▇▇▇▇▇'▇ and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade) or (ii) the unsecured, short-term debt obligations of Party A (or its Credit Support Provider) are rated below “P-1” by ▇▇▇▇▇'▇ or are rated “P-1” by ▇▇▇▇▇'▇ and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade), (B) no short-term rating is available from ▇▇▇▇▇’▇ and the unsecured, long-term senior debt obligations of Party A (or its Credit Support Provider) are rated below "Aa3" by ▇▇▇▇▇'▇ or are rated “Aa3” by ▇▇▇▇▇'▇ and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade), or (C) either (i) the unsecured, short-term debt obligations of Party A (or its Credit Support Provider) are rated below “A-1” by S&P or (ii) if Party A (or its Credit Support Provider) does not have a short-term rating from S&P, the unsecured, long-term senior debt obligations of Party A (or its Credit Support Provider) are rated below “A+” by S&P (such event, a "Collateralization Event"), then, Party A, at its own cost and subject to the Rating Agency Condition, shall within 30 days either (i) cause another entity to replace Party A as party to this Agreement that satisfies the Swap Counterparty Ratings Requirement and that is approved by Party B (which approval shall not be unreasonably withheld) on terms substantially similar to this Agreement; (ii) obtain a guaranty of, or a contingent agreemen...