Fitch seeks feedback on counterparty risk criteria proposals

If it is ratings based the triggers are there to protect the investor in the securitisation rather than the counterparty. The classic case is the current one where Lehman has defaulted and various Trustees (BNY Mellon comes to mind) are failing to act under the documents without ridiculous indemnities which essentially means that investors cannot access the collateral and the deals should never have been rated above the swap counterparty in the first place

It will be very interesting to see where this goes. Trigger events are presumably there to protect counterparties but seem to do the reverse i.e. causing a credit problem to become a liquidity crisis. Unless the company manages its exposures in a manner that enables it to mitigate the ratings trigger, the trigger is a very blunt tool indeed. with AIG what evidence is there that they did so mange their trigger exposures. There are similar issues with collaterised vehicles. If a counterparty takes too much comfort from being colaterised he might find he misses the risk of a large and sudden movement breaking the model and leaving him out of pocket 'a la SCA'.