A financial contract whereby a buyer of corporate or sovereign debt in the form of bonds attempts to eliminate possible loss arising from default by the issuer of the bonds. This is achieved by the issuer of the bonds insuring the buyer’s potential losses as part of the agreement: fears of so-called counterparty risk arising from credit default swaps were central to the investment bank’s unraveling in March
More example sentences
- Did they foresee that credit default swaps could collapse like a house of cards?
- Banks like credit default swaps - a derivative that's a kind of loan or bond insurance - because the parties who provide protection have generally paid quickly and without question when an event such as a default occurs.
- Are buyers or sellers of credit default swaps more vulnerable?
Definition of credit default swap in:
- The British & World English dictionary