Credit default swaps (CDS) are an important hedging tool for lenders and investors. ISDA’s latest review of the single-name CDS market reveals some interesting dynamics about trading activity over the past five years.

While single-name CDS market liquidity overall continues to decline, and all but a handful of reference entities are illiquid, market activity over the past five years has increased during certain periods as credit conditions tightened and the risk of defaults rose. At the same time, transparency has further improved and clearing of single names has increased.