Branching out

Investors and hedgers are entering the credit derivatives market as never before. Lisa Cooper investigates the range of new credit derivative products and applications open to them.

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Credit derivatives traders are taking advantage of increased liquidity in the single-name default swap market to develop a multitude of new and innovative products for their clients. And the threatening credit climate experienced over the last year or so – which has brought with it defaults by investment-grade names – has also encouraged new customers into the marketplace. Those already using credit derivatives have realised too that existing products may not adequately suit their

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

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The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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