The seminar covers one of the newer applications of options: the use of credit risk derivatives to manage credit risk. Whilst not all credit derivatives are options, they can be ultimately decomposed into options, as for any financial instrument.

 

At the end of Intrinsic Value's training seminar in credit derivatives that area the participant should be able to:

􀂅  Contrast technical default and actual default.

􀂅  Discuss the applications of credit derivatives.

􀂅  Define    reference    entity,    credit   event,   settlement   mechanism   and

     deliverable obligation.

􀂅  Define and discuss funded and unfunded instruments.

􀂅  List    the    types    of    credit   events   contained   in   a   standard   ISDA

     credit derivatives document.

􀂅  Define  and discuss credit default swaps (CDS) and their prospective cash

     flows.

􀂅  Define reference asset.

􀂅  Discuss some  advantages  of  physical  settlement  vs.  cash settlement in

     credit default swaps.

􀂅  Define and discuss loan-only credit default swaps (LCDS).

􀂅  Define structured finance security CDS.

􀂅  Define and discuss pay-as-you-go CDS.

􀂅  Define  and  discuss  credit-linked  notes (CLN)  and their prospective cash

     flows.

􀂅  Define  and discuss  total  return  swaps (TRS)  and their prospective cash

     flows.

􀂅  Discuss the risks of total return swaps.

􀂅  Discuss  the  potential  balance-sheet  implications  of  different total return

     swap structures.

􀂅  Discuss the use of total return swaps as a funding vehicle.

􀂅  Define a credit option call and put.

􀂅  Define  and  discuss  collateralized  debt  obligations  (CDO), collateralized

     bond  obligation  (CBO)  and  collateralized loan obligation (CLO) and their

     prospective cash flows.

􀂅  Define tranch, tranching and credit enhancement.

􀂅  Define senior note, subordinated note, mezzanine note and equity note and

     how cash flows to each.

􀂅  List various credit enhancements.

􀂅  Discuss synthetic CDOs and their prospective cash flows.

􀂅  Define reference portfolio.

􀂅  Define first-loss piece.

􀂅  Describe   unfunded,   partially   funded,   fully  funded  and  fully  unfunded

     synthetic CDOs.

􀂅  Define super-senior swap.

􀂅  Discuss some uses, advantages and limitations of synthetic CDOs.

􀂅  Discuss some general applications of credit derivatives.

􀂅  Discuss some possible unintended risks with credit derivatives.