Credit Derivatives
/ˈkrɛdɪt dɪˈrɪvətɪvz/
Definitions
- (n.) Financial contracts that transfer credit risk of an underlying entity between parties without transferring the underlying asset.
The bank used credit derivatives to hedge against potential defaults on its loan portfolio.
Forms
- credit derivatives
- credit derivative
Related terms
See also
Commentary
Credit derivatives enable risk management by isolating and trading credit risk separate from other financial risks.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.