credit-default swap

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cred·it-de·fault swap

n. Abbr. CDS
A financial instrument used as insurance against a default on a bond, loan, or other debt.
American Heritage® Dictionary of the English Language, Fifth Edition. Copyright © 2016 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.
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A credit-default swap contract is similar to insurance on a bond, but the purchaser doesn't need to own any of the underlying debt to buy one.
Morgan Stanley is arguing that the structuring bank had a conflict of interest at it stood to benefit from credit-default swap payouts and the bank breached its obligations by embarking on a "firesale" of defaulted loans in a bulk auction before the deal matured.
A basis point on a credit-default swap protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
The French bank said that Anglo Irish Bank Corp's offer to swap subordinated bonds for new notes could trigger payouts on as much as USD420m of credit-default swap contracts.
Because a credit-default swap was deemed neither insurance nor a transaction otherwise regulated by the federal government, issuers were not required to set aside adequate capital reserves to stand behind the guarantee of CDOs.
"We expect further pressure on the Dubai credit-default swap side."
Wachovia, a unit of Wells Fargo (NYSE: WFC), has won a suit that accused it of forcing a hedge fund to make higher margin payments than necessary on a credit-default swap.
Citigroup, Inc (NYSE: C) has filed a lawsuit against Morgan Stanley (NYSE: MS) related to a credit-default swap (CDS) agreement.
The suit is claiming that the bank forced a hedge fund to make higher margin payments than necessary on a credit-default swap. US District Judge Laura Taylor Swain has retained one of eight claims brought against the bank by VCG Special Opportunities Master Fund Ltd.
Malafronte trades both cash bonds and credit-default swaps.
The Markit iTraxx Europe Index of credit-default swaps insuring investment-grade corporate bonds rose by the most since 2007, according to prices compiled by Bloomberg.
Credit-default swaps insuring the sovereign notes of Southeast Asia's fastest growing economy have dropped 26 basis points this year to 87.8 basis points.