Absorbing credit risk
The success story of credit derivatives is not that they allow the most sophisticated investors to execute ever more complicated strategies but that they allow traditional investors in credit to trade with fewer restrictions and in more ways
Given the speed with which the market for structured finance products in general and credit derivatives in particular has expanded in recent years, it is understandable that there is still a wide diversity of views about the value of their impact on the broader capital market and financial services sector.
Although many saw the market’s calm response to the Enron debacle as proof positive of the merits of credit derivatives, time and precedent have apparently been powerless to persuade
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