Credit derivative
![In this example coupons from the bank's portfolio of loans are passed to the SPV which uses the cash flow to service the credit linked notes.](/Images/godic/202501/06/Securitization-en4349.PNG")
In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the credit risk" or the risk of an event of default of a corporate or sovereign borrower, transferring it to an entity other than the lender or debtholder.