CDS
n. countablen. Stands for Credit Default Swap. A complex financial agreement that acts like insurance for a loan. If a company or country cannot pay back its debt, the person who bought this agreement gets paid by the seller.
n. Abbreviation for Credit Default Swap. A financial derivative that functions as a contract between two parties, where the seller compensates the buyer in the event of a debt default. Often used as a form of credit insurance or for speculative purposes.
Investors use CDS to protect themselves against a company going bankrupt.
During the financial crisis, the massive volume of outstanding CDS contracts created significant systemic risk for global banks.
The rapid expansion of the CDS market allowed institutional investors to hedge their exposure to corporate bonds, though it also facilitated high-stakes speculation on the solvency of sovereign nations.
Commonly used in the plural form (CDSs) or as an acronym for 'Credit Default Swap'.