CDS is short for credit default swaps.

CDS is a type of insurance that bond investors can buy to protect themselves against an entity (e.g., a bank) defaulting.

MLN routinely refers to bank CDS spread data in our news stories. We typically get this data from S&P Global Market Intelligence.

According to S&P, "the CDS spread represents a premium paid to protect against default and general credit deterioration. The higher the credit risk, the higher the premium."

In cases where perceived bank risk is soaring, it often coincides with banks building risk premiums into their mortgage rates and tightening their credit policies.

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