Preface to the First Edition

A key risk run by investors in bonds or loans is credit risk, the risk that the bond or loan issuer will default on the debt. To meet the need of investors to hedge this risk, the market uses credit derivatives. These are financial instruments originally introduced to protect banks and other institutions against losses arising from default. As such, they are instruments designed to lay off or take on credit risk. Since their inception, they have been used by banks, portfolio managers and corporate treasurers to enhance returns, to trade credit, for speculative purposes and as hedging instruments.

This book aims to provide an introduction to credit derivative instruments, and their uses, for beginners. The credit derivatives ...

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