Credit derivatives purpose

Credit derivative products are defined by reference to underlying reference entities, and reference obligations, which include corporate bonds, bank loans, sovereign debt, Brady bonds, and Eurobonds. Credit derivatives are now used increasingly in structured transactions. For example synthetic collateralised loan obligations (see Chapter 15) often use credit default swaps to transfer credit risk from the originator to the special purpose vehicle (SPV). Currently, the most common products are credit default products and total return swaps. 

Asset swaps predate the introduction of the other instruments we discuss in this chapter and strictly speaking are not credit derivatives. However, they are used for similar purposes and there is considerable interplay between the cash and synthetic markets using asset swaps, hence the need to discuss them here. 

All the same, lasting credit is due to Hantzsch for refuting the proposals, made so often since 1894, to interpret the isomerism of diazo derivatives using other than stereochemical arguments. For his purpose Hantzsch used the methods of physical chemistry, such as conductivity measurements and spectroscopy, at a time when these were most unusual in the organic field. 

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