The default payment in a credit derivative is triggered by the occurrence of a credit event. We saw earlier that a technical or actual default can be a credit event.

The following is a list of the different types of credit events that can be specified in a standard credit derivatives contract.

1. If the credit rating of the reference entity falls below a specified level
2. Bankruptcy
3. Payment default (Actual or technical)
4. An increase in the credit spread paid by the reference entity
5. If the obligor opts for debt restructuring

Any one or all of the above credit events can be specified in the credit derivatives contract.