The CDS market: A primer
The CDS market: A primer
The CDS market: A primer
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<strong>CDS</strong>: Methods of Settlement<br />
– Physical delivery of the reference security<br />
– Physical delivery of equivalent asset<br />
– Cash Settlement<br />
Example, Argentine plain vanilla bond, actual price = 20<br />
� Physical settlement: Protection buyer delivers reference security,<br />
protection seller has to pay 100<br />
� Cash settlement: Protection buyer receives 100-20 = 80 from<br />
protection seller and keeps security<br />
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