Some 20 years after their invention, credit default swaps are still going through growing pains.

Late last month, the International Swaps and Derivatives Association ruled that the decision of iHeartMedia Inc. to forgo payment on $57.1 million of bonds due to an affiliate constituted a "Failure to Pay Credit Event." That would trigger payouts on as much as $749 million of swaps linked to the U.S. radio broadcaster's debt.

The decision is causing consternation among some participants in the CDS market, which has been struggling to revive volumes in the aftermath of the financial crisis. According to Barclays Plc analysts, it's the "first instance that we can recall of CDS being triggered by a company's failure to pay itself."

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