My question is regarding the difference between reference obligation and underlying obligation...
In a CDS term sheet.. how is the reference obligation classified?( is it according to the classes of debt of the reference entity or their credit ratings?)...and how is the mismatch between reference obligation and an underlying obligation figured out?
For eg: a sample CDS term sheet says:
Reference entity: Jackfruit records corporation
Reference obligation:- Primary Obligor: Jackfruit records
Now what are the deliverable bonds/loans in case of a default???