Definitions for credit default swap
cred·it default swap

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1. credit default swapnoun

   A credit derivative contract between two counterparties, whereby the buyer (seller of risk) makes periodic payments to the seller (buyer of risk) in exchange for the right to a payoff if there is a default or other credit event in respect of a third party called reference entity.

WikipediaRate this definition:0.0 / 0 votes

1. Credit default swap

   A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, may expect to receive a payoff if the asset defaults. In the event of default, the buyer of the credit default swap receives compensation (usually the face value of the loan), and the seller of the CDS takes possession of the defaulted loan or its market value in cash. However, anyone can purchase a CDS, even buyers who do not hold the loan instrument and who have no direct insurable interest in the loan (these are called "naked" CDSs). If there are more CDS contracts outstanding than bonds in existence, a protocol exists to hold a credit event auction. The payment received is often substantially less than the face value of the loan.Credit default swaps in their current form have existed since the early 1990s and increased in use in the early 2000s. By the end of 2007, the outstanding CDS amount was $62.2 trillion, falling to $26.3 trillion by mid-year 2010 and reportedly $25.5 trillion in early 2012. CDSs are not traded on an exchange and there is no required reporting of transactions to a government agency. During the 2007–2010 financial crisis the lack of transparency in this large market became a concern to regulators as it could pose a systemic risk. In March 2010, the Depository Trust & Clearing Corporation (see Sources of Market Data) announced it would give regulators greater access to its credit default swaps database. There is "$8 trillion notional value outstanding" as of June 2018.CDS data can be used by financial professionals, regulators, and the media to monitor how the market views credit risk of any entity on which a CDS is available, which can be compared to that provided by the Credit Rating Agencies. Most CDSs are documented using standard forms drafted by the International Swaps and Derivatives Association (ISDA), although there are many variants. In addition to the basic, single-name swaps, there are basket default swaps (BDSs), index CDSs, funded CDSs (also called credit-linked notes), as well as loan-only credit default swaps (LCDS). In addition to corporations and governments, the reference entity can include a special purpose vehicle issuing asset-backed securities.Some claim that derivatives such as CDS are potentially dangerous in that they combine priority in bankruptcy with a lack of transparency. A CDS can be unsecured (without collateral) and be at higher risk for a default.

WikidataRate this definition:0.0 / 0 votes

1. Credit default swap

   A credit default swap is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a loan default or other credit event. The buyer of the CDS makes a series of payments to the seller and, in exchange, receives a payoff if the loan defaults. It was invented by Blythe Masters from JP Morgan in 1994. In the event of default the buyer of the CDS receives compensation, and the seller of the CDS takes possession of the defaulted loan. However, anyone can purchase a CDS, even buyers who do not hold the loan instrument and who have no direct insurable interest in the loan. If there are more CDS contracts outstanding than bonds in existence, a protocol exists to hold a credit event auction; the payment received is usually substantially less than the face value of the loan. Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion, falling to $26.3 trillion by mid-year 2010 but reportedly $25.5 trillion in early 2012. CDSs are not traded on an exchange and there is no required reporting of transactions to a government agency. During the 2007-2010 financial crisis the lack of transparency in this large market became a concern to regulators as it could pose a systemic risk. In March 2010, the [DTCC] Trade Information Warehouse announced it would give regulators greater access to its credit default swaps database.

How to pronounce credit default swap?

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How to say credit default swap in sign language?

Numerology

1. Chaldean Numerology

   The numerical value of credit default swap in Chaldean Numerology is: 5

2. Pythagorean Numerology

   The numerical value of credit default swap in Pythagorean Numerology is: 7

Examples of credit default swap in a Sentence

1. Lorne Baring:

   The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is under-capitalised in Europe and credit conditions are sub-optimal, and when combined that with the global macro backdrop, with Chinese growth slowing down, there is a natural impact of it around the world and the banking sector is bearing the brunt. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector.

2. Lorne Baring:

   The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is under-capitalised in Europe and credit conditions are sub-optimal, and when combined with the global macro backdrop, with Chinese growth slowing down, there is a natural impact of it around the world and the banking sector is bearing the brunt. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector.

3. Lorne Baring:

   The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is undercapitalised in Europe and credit conditions are sub-optimal, combined with the global macro backdrop, with Chinese growth slowing down, there is a natural impact around the world and the banking sector is bearing the brunt. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector.

References

1. ^ Wiktionary
   https://en.wiktionary.org/wiki/Credit_Default_Swap
2. ^ Wikipedia
   https://en.wikipedia.org/wiki/Credit_Default_Swap
3. ^ Wikidata
   https://www.wikidata.org/w/index.php?search=credit default swap