Credit default swap

Credit default swap — a contract under which a third party assumes the obligation to repay the loan instead of the underlying borrower, issued by a “Lender”, in the case of the occurrence of certain events. For “Creditor”, who pays a third party a commission, this tool is an insurance. In the event of default of the underlying borrower, the “Lender” transfers the right to claim the debt in exchange to a third party for its repayment.

About the author