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 unravelling in March
More example sentences
- The credit default swap (CDS) market, which enables investors to hedge the risk of default by individual borrowers, is increasing exponentially.
- That has pushed managers into more exotic instruments, such as credit default swaps, bank loans, and mortgage-backed securities.
- Are buyers or sellers of credit default swaps more vulnerable?
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Line breaks: credit de|fault swap
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