Credit derivative market grew 48% during first half of 2005, says Isda

The notional amount of credit derivatives outstanding hit $12.43 trillion at the end of June, according to the International Swaps and Derivatives Association.

The over-the-counter (OTC) derivatives industry trade association said the credit derivative market grew by 48% during the first six months of 2005. In mid-2004, the size of the market was $5.44 trillion.

For the purposes of its survey, Isda took the market to comprise of credit default swaps (CDS), baskets and portfolio transactions indexed to single names, indexes, baskets, and portfolios.

The credit derivative market’s 128% year-on-year growth rate eclipsed, in proportionate terms, growth in other markets. Notional outstanding volume for equity derivatives grew to $4.83 trillion – equivalent to year-on-year growth of 28%.

The notional principal outstanding volume of interest rate derivatives, including swaps, swaptions and cross-currency swaps, grew by nearly 10% during the first half of 2005 to reach $201.4 trillion.

Isda surveyed 101 firms on a confidential basis. It adjusted notional principal outstanding amounts for double counting of inter-dealer transactions.