Definitions
from Wiktionary, Creative Commons Attribution/Share-Alike License.
- noun finance A
credit derivative contract between twocounterparties , 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 adefault or othercredit event in respect of a third party called reference entity.
Etymologies
Sorry, no etymologies found.
Support
Help support Wordnik (and make this page ad-free) by adopting the word credit default swap.
Examples
Sorry, no example sentences found.
john commented on the word credit default swap
“The credit crisis has played out in places most people can’t see. It’s banks refusing to lend to other banks — even though that is one of the most essential functions of the banking system. It’s a loss of confidence in seemingly healthy institutions like Morgan Stanley and Goldman — both of which reported profits even as the pressure was mounting. It is panicked hedge funds pulling out cash. It is frightened investors protecting themselves by buying credit-default swaps — a financial insurance policy against potential bankruptcy — at prices 30 times what they normally would pay.�?
The New York Times, 36 Hours of Alarm and Action as Crisis Spiraled, by Joe Nocera, October 1, 2008
October 2, 2008