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Loan Credit Default Swap

Loan Credit Default Swap Definition

Loan Credit Default Swap (LCDS) is a type of credit derivative that enables counterparties to exchange the credit risk of a loan without transferring the ownership of the loan. These derivatives are used to hedge against credit exposure of the underlying loan as the risk is swapped between two parties.


Additional meaning of Loan Credit Default Swap:

LCDS trades are linked to secured obligations, therefore recovery values are higher in case the loans default.





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