Thursday, December 15, 2005

Credit derivative use

Most investors who were disappointed by bankruptcies such as Norbourg in Canada or Enron in US will certainly understand the benefits of diversifying. Nonetheless the other lessons from theses disasters is that now hedging is not enough for protecting capital, it is also necessary to protect oneself against the risk of solvency of the issues of the titles they hold. Consequently mutual funds managers and Financial institutions will have the opportunity to offer new products such as credit derivatives.