Credit derivatives

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A credit derivative is a privately negotiated agreement that explicitly shifts credit risk from one party to the other.^[1]

There was approximately $54 trillion in the credit derivatives market as of October 2008.^[2]

Credit default swaps (CDS) are the most common type of credit derivative. American International Group (AIG)'s collapse was thought to stem from a $441 billion exposure to credit-default swaps and other derivatives.

Lehman Brothers' credit default swaps settlement auction was one of the most expensive payouts in the history of the market.^[3]

References

1. ↑ Credit Derivatives. ISDA. Retrieved on May 30, 2008.
2. ↑ ICE Joins Banks For Global Clearing Solution. Financial Times. Retrieved on October 14, 2008.
3. ↑ FACTBOX-Lehman CDS Settlement Auction Timeline. Reuters. Retrieved on October 22, 2008.