credit default swap

English

Noun

credit default swap (plural credit default swaps)

1. (finance) 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.

   Synonym: (initialism) CDS

   • 2023 March 15, Michael J. de la Merced, Maureen Farrell, “Credit Suisse to Borrow Up to $54 Billion From Central Bank”, in The New York Times‎^[1]:

     The cost of that funding is partially influenced by the price of an instrument known as a credit default swap — essentially, a form of insurance that one party buys to protect against the possibility that another party will default. The higher the risk of default, the higher the price of the C.D.S., and the higher the cost of funding.

Hypernyms

• contract, derivative

Translations

contract

• Czech: swap úvěrového selhání m
• Finnish: luottoriskinvaihtosopimus
• Spanish: permuta de incumplimiento crediticio f, swap de incumplimiento crediticio m