Unlocking Credit Default Swaps ETF: 2025 Strategies & Risks
Credit Default Swaps: Understanding the Mechanics Credit default swaps (CDSs) are complex financial instruments often described as "insurance" for bonds. They involve a contract where one party (the buyer) pays a regular fee (the spread) to another party (the seller) for protection against a default on a specific debt. If the debt issuer defaults, the seller compensates the buyer for the losses. The amount of debt covered is the notional principal....