Credit default swap (CDS) - Financial definition
Concise definition of the term credit default swap
A credit default swap is a contract in which one party (the protection seller) agrees to receive periodic payments in return for making a contingent payment to the protection buyer, following a credit event (downgrade, default) on a specific security or loan.
Comprehensive definition of the term credit default swap
A credit default event would normally cover payment default, bankruptcy and rescheduling/restructuring of debt. It must be a material and objectively measurable default. In particular, note that ratings downgrades are not in themselves evidence of default.