Accordeds

Accordeds are a type of financial instrument used in the derivatives market, specifically in the context of credit default swaps (CDS). An accorded is a CDS contract where the buyer of the protection (the protection buyer) agrees to pay a periodic fee to the seller of the protection (the protection seller) in exchange for the protection seller's obligation to make payments to the protection buyer in the event of a credit event on the reference entity.

The term "accorded" refers to the periodic fee paid by the protection buyer to the protection seller. This fee is typically a fixed percentage of the notional amount of the CDS contract and is paid regardless of whether a credit event occurs. The purpose of the accorded is to compensate the protection seller for the risk of default on the reference entity.

Accordeds are an important component of the CDS market, as they provide a way for investors to transfer credit risk to other parties. This can be useful for investors who want to reduce their exposure to credit risk, or for investors who want to take advantage of the potential for credit spreads to widen. However, accordeds also carry certain risks, including the risk of default on the reference entity and the risk of changes in credit spreads.

Accordeds are typically traded over-the-counter (OTC) and are not standardized. This means that the terms of each accorded contract can vary depending on the parties involved and the specific circumstances of the transaction. As a result, it can be difficult to compare accordeds from different issuers or to value them accurately.

In summary, accordeds are a type of financial instrument used in the derivatives market, specifically in the context of credit default swaps. They provide a way for investors to transfer credit risk to other parties, but they also carry certain risks. Accordeds are typically traded over-the-counter and are not standardized, which can make them difficult to compare or value accurately.