What are the benefits of CDs?

In addition to hedging credit risk, the potential benefits of CDS include: The performance of credit default swaps, like that of corporate bonds, is closely related to changes in credit spreads. This sensitivity makes them an effective tool for portfolio managers to hedge or gain exposure to credit.

What is a CDS Index?

CDS index. The credits referenced in a CDS are known as “reference entities.” CDS range in maturity from one to 10 years although the five-year CDS is the most frequently traded. Credit default swaps provide a measure of protection against previously agreed upon credit events.

What is a CDS & how does it work?

Speculative Opportunities: CDS provide investors with opportunities for speculation and profit generation. Through CDS contracts, investors can take directional views on credit markets, betting on the likelihood of default or changes in credit spreads.