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Credit Default Swap
(redirected from CDS)

   Also found in: Dictionary/thesaurus, Medical, Acronyms, Encyclopedia, Wikipedia, Hutchinson 0.01 sec.
Credit Default Swap (CDS)

What Does Credit Default Swap (CDS) Mean?

A swap designed to transfer the credit exposure of fixed-income products between parties.

Investopedia explains Credit Default Swap (CDS)

The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the creditworthiness of the product. When this is done, the risk of default is transferred from the holder of the fixed-income security to the seller of the swap. For example, the buyer of a credit swap still is entitled to the par value of the bond from the seller of the swap if the bond defaults in its coupon payments.

Related Terms:
Bond
• Credit Derivative
• Fixed Income Security
Interest Rate Swap
Swap



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