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Enron Mail |
Mark-
Thanks for your quick response. My responses to the points you have raised are set forth in red below. Upon receipt of IBJ's detailed comments, I will forward same for your review. John- We have received preliminary comments back from IBJ relating to the draft ISDA documentation we recently provided to them. IBJ appears unwilling to enter into a CSA with us. Please review the traffic below, including Mark's comments. Please provide your view as to how we should proceed on this point. Best regards, John Mark Taylor@ECT 08/31/2000 07:07 PM To: John Viverito/Corp/Enron@ENRON cc: Jonathan Whitehead/AP/Enron@Enron Subject: Re: IBJ ISDA MASTER AGREEMENT John - While we can delete Part 6 it then becomes necessary to add additional language in each confirmation which is not part of the templates for transactions used by the back office. Each transaction would therefore require significant additional time and effort to prepare making it more cumbersome to do business with that counterparty. There is no down-side to having the language in the master - the whole point of the master is that we agree to these things now so we don't have to deal with them at the confirm stage. You can say "it's enough if the terms are referred to in the confirmation" for ALL of the terms of the master. Since we would insist on the appropriate provisions being in the confirm in any event, if they have a problem with this language we need to know now what the problem is. I agree to all of the preceding points you have raised and really do not understand why IBJ would desire to delete these provisions. Once we receive all of their specific comments, we will require an explanation as to why these provisions are not acceptable.With respect to the CSA, that is an issue for Credit. I will forward this to John Suttle for his input. It is certainly not necessary to have a valid agreement but it is necessary if you want to insist on collateral. In this case, if IBJ is a stronger credit than Enron it may well be that the csa is more of a burden than a benefit. Good point. It strikes me as disingenuous to say that they don't have the internal systems for csa's with nonfinancial counterparties - the same systems would work for nonfinancial parties as well as financial parties. IBJ is the most sophisticated Japanese player in the derivative market and one would believe that they could handle the documentation for both financial and non-financial entities. I note, I have heard that it is not market practice for Japanese financial institutions to provide collateral to non-financial institutions, so it may be very difficult for them to alter their position. John Viverito@ENRON 08/30/2000 07:49 PM To: Mark Taylor/HOU/ECT@ECT cc: Jonathan Whitehead/AP/Enron@Enron Subject: Re: IBJ ISDA MASTER AGREEMENT Mark- We have received some preliminary comments from IBJ, attached hereto for your review. Please give me your thoughts regarding deletion of Part 6 of the Schedule and not utilizing the CSA. Thanks, John ----- Forwarded by John Viverito/Corp/Enron on 08/30/2000 07:44 PM ----- "Yamato Konishi" <yamato.konishi@ibjbank.co.jp< 08/30/2000 07:59 AM To: <John.Viverito@enron.com< cc: <Jonathan.Whitehead@enron.com<, "Tom Bruce-Jones" <Tom.Bruce-Jones@enron.com<, "teruyo.suzuki" <teruyo.suzuki@ibjbank.co.jp<, "Maeda san" <kazunobu.maeda@ibjbank.co.jp< Subject: Re: IBJ ISDA MASTER AGREEMENT Dear Mr.Viverito Thank you very much. Now we start checking your draft and maybe we can return comment on this Friday. Please be advised following points at this time. 1)Part 6 on the schedule is needed to be deleted. We think that it's enough if the terms in Part 6 are referred in the individual confirmation. 2)ISDA Credit support annex is not acceptable Unfortunately, we don't have internal system for concluding CSA with non-financial entity. Please keep support us for concluding ISDA ASAP for our business in near future. If any question, please feel free to contact me. Best regards, Konishi /IBJ Tokyo 81-3-3214-1008 ----- Original Message ----- From: <John.Viverito@enron.com< To: <yamato.konishi@ibjbank.co.jp< Cc: <Jonathan.Whitehead@enron.com< Sent: Wednesday, August 30, 2000 5:31 PM Subject: IBJ ISDA MASTER AGREEMENT < Dear Mr. Konishi, < < Attached hereto, is the draft ISDA documentation, for your review. < Included are the Schedule, the Credit Support Annex and the Enron Corp. < Guaranty. < < I apologize for the delay in the preparation and distribution of these < documents. < < We look forward to receiving your comments. < < Best regards, < < John Viverito < < < (See attached file: IBJ Schedule 30.08.00.doc)(See attached file: IBJ CSA < 30.08.00.doc)(See attached file: IBJ EC guarantee 30.08.00.doc)
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