of Credit Derivatives
Derivatives: Market Info and awareness
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Quotable quotes on Credit derivatives
on 5th Feb., 2002
- A commentator about risks of investing in credit derivatives, quoted in an article in 1993.
on 12th June, 2001
"These derivatives represent a natural extension of the market for
similar products that 'unbundle' risks, such as certain interest rate
and foreign exchange products. When used properly, credit derivatives
can help to diversify credit risk, improve earnings, and lower the risk
profile of an institution."
"The new impetus for us as investors is to be balance-sheet suppliers.
Weíve detected a rise in the pricing of total-return swaps in which we
provide a balance-sheet rental. The trade is simple: We buy an asset and
then transfer all of the credit risk of the asset back to the bank that
sold us the asset. For the counterparty, itís a way for it to take the
risk of an asset but not have to fund it."