1. 

   r_v.s Member

   Would you please explain the meaning of
   
   "Both the CDS and the LOC seek to improve the buyer/holdercredit risk on company A by including an additional credit counterparty for a fee"?

    

   Last edited by a moderator: Mar 8, 2015

   r_v.s, Mar 8, 2015

   #1
2. 

   Colin McKee ActEd Tutor Staff Member

   I think its just a way of saying that, if you want your credit risk to company A improved, both LOC and CDSs will do the job for a fee. In both cases, a third party makes a guarantee of some sort for the fee, which improves your credit risk to Company A.

    

   Colin McKee, Mar 9, 2015

   #2

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