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- Dictionarycredit default swap
noun
- 1. a financial contract whereby a buyer of corporate or sovereign debt in the form of bonds attempts to eliminate possible loss arising from default by the issuer of the bonds. This is achieved by the issuer of the bonds insuring the buyer’s potential losses as part of the agreement: "fears of so-called counterparty risk arising from credit default swaps were central to the investment bank's unravelling in March"
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