PPT Slide
Uses of credit derivatives
To hedge against an increase in risk, or to gain exposure to a market
• Creating customized exposure; e.g. gain exposure to Russian debts
(rated below the manager’s criteria per her investment mandate).
• Leveraging credit views - restructuring the risk/return profiles of
• Allow investors to eliminate credit risk from other risks in the
Credit derivatives allow investors to take advantage of relative value
opportunities by exploiting inefficiencies in the credit markets.