Default
Short definition
Default is a breach of a payment or covenant obligation in the contract. Payment default is missing cash; covenant (technical) default often triggers acceleration and cross-default.
Detailed explanation
The event is defined in the contract: grace, cure, materiality. Cross-default spreads one pack to all.
PD is the probability of default; loss = PD × (1 − recovery) × exposure. A rating is a crude grade of that PD.
Why it matters for the CFO
Technical default can freeze a line while cash still exists and turns negotiation into a fire. An early waiver is cheaper than default.
How to read it
Payment default is liquidity; covenant default is contract discipline. They are not the same “we are bust” sentence.
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Definitions are educational. They are not investment, credit or tax advice.