Cr derivatives Cr

Cr derivatives Cr derivatives are bilateral financial contracts (Over The Counter – OTC) by which a party seeks to cover the cr risk of a particular instrument and transfer it to the counterparty in exchange for a regular premium. Are derivatives whose underlying payment obligations of public and private issuers. The risks covered by a cr derivative (default or event of default) are defined in the contract events: bankruptcy, liquidation, default by the reference entity, downgrading of the company by rating agencies (Moody’s Standard Poor’s, FitchRatings and others), and so on. Since bilateral financial contracts, market participants often use standard contracts in order to negotiate contracts be standardized by liquid as its bargaining is referred only to financial terms to be other standards.Market players often refer to clauses ISDA 2003 (International Swaps and Derivatives Association inc.) Establishing a legal framework for the negotiation of such products. The most common cr derivatives are the Cr Default Swap (CDS) and the Equity Default Swap (EDS). In common vacabulario cops are known as insurance against the risk that an investor is taking.

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