Credit Default Swaps
A comprehensive professional guide to credit default swap mechanics, pricing methodologies, trading strategies, and risk management frameworks with real-world implementation examples
Credit Default Swaps
Executive Summary
Credit default swaps represent one of the most significant innovations in modern credit markets, fundamentally transforming how institutions manage, trade, and transfer credit risk. With global notional outstanding exceeding USD 9 trillion, the CDS market provides essential tools for credit hedging, relative value trading, and portfolio optimisation across institutional investor categories.
The post-crisis regulatory transformation has created a more structured, transparent market whilst maintaining the fundamental economic benefits that drive institutional adoption. Modern CDS markets combine sophisticated pricing methodologies with robust risk management frameworks, creating opportunities for credit hedging and complex trading strategies.
This professional manual provides comprehensive coverage of institutional CDS practice, from fundamental contract mechanics through advanced portfolio applications. Practitioners will develop expertise in pricing, trading, and risk management appropriate for professional credit market participation.