Abstract
Credit default swaps (CDS) are the most common type of credit derivative. CDS are by far the main credit derivatives product in terms of notional amount outstanding. Their dominance of the marketplace is even more striking in terms of their share of the total activity in the credit derivatives market. As actively quoted and negotiated single-name instruments, CDS are important in their own right, but their significance also stems from the fact that they serve as building blocks for many complex multi-name products. The rising liquidity of the credit default swap market is evidenced by the fact that major dealers now regularly disseminate quotes for such contracts. Furthermore, along with risk spreads in the corporate bond market, CDS quotes are now commonly relied upon as indicators of investors' perceptions risk regarding individual firms and their willingness to bear this risk. In addition, quotes from the CDS market are reportedly increasingly used as inputs in the pricing of other traditional credit products such as bank loans and corporate bonds, helping promote greater integration of the various segments of the credit market.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Understanding Credit Derivatives and Related Instruments
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
