CDPCs: Closed for business
Credit derivatives product companies, the specialised financial insurers who sold protection to structured credit counterparties, have seen the bottom fall out of their market with the demise of the structured products asset class. Some CDPCs, like Primus, are diversifying into other business lines. Others are struggling on with their existing model. Credit looks at how the CDPCs are facing up to a crisis that threatens their very existence
Credit derivatives product companies (CDPCs) were once one of the hottest areas in finance. Like monolines, the vehicles specialised in transferring credit risk, but operated mainly in the derivatives market. Interest in CDPCs hit a peak at the height of the credit bubble, with many banks eagerly using the vehicles to lay off sizeable exposures to super-senior tranches of corporate and asset-backed collateralised debt obligations (CDOs) and highly rated single names. By February 2007, Moody's
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