Understanding Counterparty Risk

June 2006
Bond Buyer;6/26/2006, Vol. 356 Issue 32410, p37
Trade Publication
The article reflects the opinion of the author on counterparty transaction. According to the author interest rate swaps has different exposures for many municipalities such as long term exposure to credit to their swap counterparty. It is important to consider the risks of counterparty swapping which will create a potential loss of value due to default. Such risk has two components including the higher risk that a counterparty will default and another is potential severity of the loss.


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