A debt obligation of the reference entity that the credit protection buyer must deliver to the credit protection seller in a physically settled (or auction settled) credit derivatives transaction such as a credit default swap (CDS) in which a credit event has occurred with respect to the reference entity. The deliverable obligation must conform to the criteria specified in the CDS transaction confirmation.

Upon delivery of the deliverable obligation by the credit protection buyer to the credit protection seller after the occurrence of the credit event, and upon the satisfaction of any other conditions to settlement of the transaction specified in the transaction confirmation, one or more credit protection payments become due and owing by the credit protection seller to the credit protection buyer.

Note that the deliverable obligations under a physically settled CDS need not be, and often is not, the reference obligation, due to a shortage of deliverable obligations in the market. However, the reference obligation is always a deliverable obligation (see Section 3.2(b) of the 2014 ISDA Credit Derivatives Definitions).