Risk hedging for transactions with no accounts receivable

Many companies face the problem of losses caused by another company going bankrupt but being unable to demand payment for such losses due to the absence of accounts receivable. Such situations can include the costs incurred from having to switch to a new supplier when an original supplier goes bankrupt, or investments made in plant and equipment with the expectation of an increase in transactions with a transaction partner that subsequently goes bankrupt.

Providing the solution here are CDS (credit default swaps – a financial derivative product that covers the risk of a company defaulting on its obligations).

faced with a given situation, such as the bankruptcy of the reference company (the company with whom transactions are guaranteed is referred to as the “reference company”), the buyer of a CDS can receive an amount of money agreed when the contract was initially signed. There are even some cases where the amount of money that can be received is in the tens or even hundreds of millions of yen.

Uncollected debts are not the only credit risks that companies face, and our solutions will continue to be a potential solution to these problems.

*CDS applications are only accepted from financial instruments dealers, or from corporate clients with capital of one billion yen or more.