What Is a Credit Default Swap (CDS)? - TheStreet Definition

Dictionary of Financial Terms

A credit default swap is a type of contract that offers a guarantee against the non-payment of a loan. In this agreement, the seller of the swap will pay the buyer in the case of a credit event (default) by a third-party. If no default occurs, the seller of the swap will have collected a premium from the buyer.

Definitions of Financial Terms