See how we rate investing products to write unbiased product reviews. A credit default swap (CDS) is a contract that allows one party (an investor) to transfer some or all risk to a third party ...

A credit default swap is a financial contract that allows an investor to offset their credit risk. It functions like insurance for bondholders or lenders, and is commonly used in bond markets and ...

What was the utility of the credit default swap in that case? Well, the basic concept or the original driver of credit derivatives was for banks to be able to transfer credit risk off of their ...