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Credit default swap  (CDS) - Financial definition

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Translations:      FR  contrat d'échange sur défaut (n.m.)     ES  permuta de incumplimiento crediticio (n.f.) , seguro de impago de deuda (n.m.)     DE  Kreditausfallversicherung (n.f.) 

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.

Additional information related to this definition

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