Double default occurs in banking, when the obligor and the guarantor fail to meet their obligations.
[1][2] A debt default known as a "double default" occurs when both the borrower and the guarantor or supplier of credit insurance for the same receivable are at fault.
Double default is a financial term that refers to the default of both a bond issuer and the company that has provided a credit enhancement (such as a guarantee or insurance) for the bond.
A credit enhancement is a financial instrument or mechanism that is used to improve the creditworthiness of a bond.
It can take the form of a guarantee or insurance provided by a third party, or it can be a structure that is designed to reduce the risk of default.