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English definition of “credit default swap”

credit default swap

noun [C]
 
 
(also credit swap)
FINANCE a type of credit derivative in which the buyer pays the seller for the right to get money back if a particular loan, bond, etc. is not paid back: The cornerstone of the credit derivatives market is the credit default swap, a sort of insurance policy that allows two parties to exchange the credit risk of an issuer.
(Definition of credit default swap from the Cambridge Business English Dictionary © Cambridge University Press)
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