About Credit Derivative
Credit Derivative is a financial contract that allows parties to reduce their credit risk exposure. Credit derivatives are privately held, negotiable bilateral contracts traded over-the-counter (OTC) between two creditor or debtor parties. These enable a creditor to effectively transfer some or all of the risk of a debtor's default to a third party. This third party takes on the risk in exchange for a payment known as the premium. A credit derivative is a type of derivative contract whose value is derived from the underlying debt instrument and is used to protect the lender from credit risk. The risk that borrowers will default on their loans or debt obligations is referred to as credit risk.
Attributes | Details |
---|
Study Period | 2017-2027 |
Base Year | 2021 |
Unit | Value (USD Million) |
The strong growth of the credit derivatives market is largely due to banks' desire to better calibrate credit risk and traders' desire to profit from exposure to credit markets. This is driving this growth. Participants, including commercial banks, investment banks, and investors, appear to find a variety of credit derivative products useful for risk management purposes, which is driving this growth. Prior to the crisis, markets saw an exponential increase in the use of credit default swaps (CDSs) to hedge and trade credit risk. The companies are exploring the market by adopting mergers & acquisitions, expansions, investments, new service launches, and collaborations as their preferred strategies. The players are exploring new geographies through expansions and acquisitions to avail a competitive advantage through combined synergies. Analyst at AMA Research estimates that United States Players will contribute the maximum growth to Global Credit Derivative market throughout the forecasted period. Established and emerging Players should take a closer view at their existing organizations and reinvent traditional business and operating models to adapt to the future.
ANZ (Australia), BNP Paribas (France), Deutsche Bank (Germany), Goldman Sachs (United States), J.P. Morgan (United States), Nomura (Japan), Societe Generale (France), Morgan Stanley (United States), Wells Fargo (United States) and SunTrust Bank (United States) are some of the key players that are part of study coverage. Additionally, the Players which are also part of the research coverage are Bank of America (United States), Chase Bank (United States), Truist (United States) and Others.
Segmentation Overview
AMA Research has segmented the market of Global Credit Derivative market by Type (Unfunded Credit Derivatives, Funded Credit Derivatives, Credit Default Swap, Total Return Swap, Credit-linked Note and Credit Spread Option), Application (Hedging and Speculation and Arbitrage) and Region.
On the basis of geography, the market of Credit Derivative has been segmented into South America (Brazil, Argentina, Rest of South America), Asia Pacific (China, Japan, India, South Korea, Australia, Rest of Asia-Pacific), Europe (Germany, France, Italy, United Kingdom, Netherlands, Rest of Europe), MEA (Middle East, Africa), North America (United States, Canada, Mexico). If we see Market by End Users, the sub-segment i.e. Startups will boost the Credit Derivative market. Additionally, the rising demand from SMEs and various industry verticals gives enough cushion to market growth. If we see Market by Component, the sub-segment i.e. Solutions will boost the Credit Derivative market. Additionally, the rising demand from SMEs and various industry verticals gives enough cushion to market growth.
Market Leaders and their expansionary development strategies
On 9th December 2021, Rumours have circulated about a possible merger between Westpac Banking Corp and Australia and New Zealand Banking Group Ltd. The big four have stood the test of time as the foundation of Australia's financial system. In fact, the Australian Government has long protected the big four under the four pillars policy. The key distinction is that it is government policy, not legislation.
On 4th August 2021, The Depository Trust & Clearing Corporation (DTCC), the leading market infrastructure for the global financial services sector, recently announced the launch of an upgraded version of its CDS Kinetics platform to meet the rising demand for increased transparency in the over-the-counter derivatives market for credit default swaps (CDS).
The Reserve Bank of India said in a draught guidelines issued for Credit Default Swap (CDS), a derivative instrument gaining traction globally after the great economic recession, that insurance companies, mutual funds, foreign portfolio investors, select companies, pension and alternative investment funds, among others, will be permitted to buy protection against any possible default on select debt securities.
Market Drivers
- Increasing Digitalization and Adoption of Technological Advancement to Serve Customers Online and Offer Enhanced Services
- Demand for Commercial Banking Services is growing among Small and Medium-Sized Businesses and Startups
Opportunities
- High Growth of Commercial Banking and Increasing Digital Transformation of Commercial Banking in the United States
- Increased Integration of Cloud-based Technology Due to Enhances Flexibility
Restraints
- Short-Term Funding Availability and Difficult Loan-Granting Conditions
Challenges
- Expensiveness of Commercial Banking and Business Accounts Compared to Traditional Financial services company
Key Target Audience
New Entrants/Investors, Analysts and Strategic Business Planners, Credit Derivative & Service Providers, Venture Capitalists and Private Equity Firms, Research Organizations, Government Bodies, End-users and Others
About Approach
To evaluate and validate the market size various sources including primary and secondary analysis is utilized. AMA Research follows regulatory standards such as NAICS/SIC/ICB/TRCB, to have the better understanding of the market. The market study is conducted on basis of more than 200 companies dealing in the market regional as well as global areas with purpose to understand companys positioning regarding market value, volume and their market share for regional as well as global.
Further to bring relevance specific to any niche market we set and apply number of criteria like Geographic Footprints, Regional Segments of Revenue, Operational Centres, etc. The next step is to finalize a team (In-House + Data Agencies) who then starts collecting C & D level executives and profiles, Industry experts, Opinion leaders etc. and work towards appointment generation.
The primary research is performed by taking the interviews of executives of various companies dealing in the market as well as using the survey reports, research institute, and latest research reports. Meanwhile, analyst team keeps preparing set of questionnaires and after getting appointee list; the target audience are then tapped and segregated with various mediums and channels that are feasible for making connection that includes email communication, telephonic, skype, LinkedIn Group & InMail, Community Forums, Community Forums, open Survey, SurveyMonkey etc.