Credit Events

From Financial Literacy Wiki

Credit Events refers to a change in borrower's credit standing or an actual default in payment that will affect the payoff or value on a structured product.

For example, the bankruptcy of Lehman Brothers in 2008, or defaults in loan agreements or a creditor raising doubts on debtor's ability to pay back loans.

Investors have to note that if an underlying stock in a structured product is in danger of triggering a credit even, he should take appropriate action early.