A fresh look at credit default swaps

Corporates still account for only a tiny proportion of the credit derivatives market, but with the sector growing in size and liquidity, Pablo Triana Portela argues that treasurers should reconsider their aversion to hedging receivables with credit derivatives

Corporate treasurers have, for the most part, shied away from the otherwise fast-growing credit derivatives market. This is somewhat puzzling – bankers certainly had high hopes for this customer segment given the many benefits the product can offer to corporate treasurers and finance directors.

Corporates all over the world face huge amounts of credit exposure: trade receivables, vendor financing loans, exposure to derivatives counterparties, financial leases and sovereign risk. And while other