Credit Derivatives

Credit derivatives are financial contacts that are designed to protect a bank or other lending institutions against loss due to defaults on its loan or security holdings. This helps financial institutes like banks to reduce their credit risk exposure and in some cases interest risk exposure as well. Credit derivatives may be like credit swap, credit option, credit default swap etc.

Credit derivatives is the financial contracts that are designed to protect a bank or other lending institution against loss due to defaults on its loans or security holdings.