Staying away in droves

Dealers’ hopes that corporates would embrace credit derivatives have largely been dashed. Why haven’t corporates embraced this market? Sarfraz Thind reports

In early 2001, dealers were predicting that corporates would flock to the creditderivatives market as it became more liquid and prices declined (Risk June 2001,page 30). Yet, though banks say they have made big strides in this sector, thefacts suggest otherwise. Risk’s annual credit derivatives survey showsthat corporate activity last year accounted for only 2.3% of the overall market(Risk February 2003, page 20).

Corporates complain that the market is not deep enough and that protection