credit derivative

Definition

A contract between two parties that allows for the use of a derivative instrument to transfer credit risk from one party to another. The party transferring risk away has to pay a fee to the party that will take the risk.

Use credit derivative in a sentence

If you have some credit that you want to transfer the best way may be to use a credit derivative for the exchange.

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You should try to make sure that both parties know what is expected when you are working with a credit derivative.

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The credit derivative was a contract and it made me wonder about it because it did not sound like a typical contract at all.

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