Asia Risk 15: Credit derivatives perform vital role but at heavy cost

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In the early- to mid-1990s, Asian banks predominantly housed the credit risk of counterparties by holding loans on their balance sheets. But the 1994 Latin American debt crisis prompted a shift in Asian debt markets. Banks began to unload credit risk through tradable instruments, such as bonds and floating rate notes, says Simon Chiu, Hong Kong-based head of credit flow trading for Asia including Japan at BNP Paribas. “This also encouraged the advent of a credit default swap (CDS) market in Asia

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

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