The emergence of credit derivatives

Credit guide: introduction

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Over the past decade, the credit derivatives market has grown at a breathtaking speed. When the most basic form of credit derivatives, credit default swaps (CDS), first emerged in the US in the early 1990s, they were used principally by banks as proprietary instruments to hedge their loan exposure. By the middle of the 1990s, more sophisticated fixed-income investors were starting to dabble in the market, although it was not until the latter part of the decade that credit derivatives were

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