Luottosidonnaisiin

Luottosidonnaisiin, also known as credit-linked notes (CLNs), are a type of structured financial product. They combine a traditional fixed-income instrument, such as a bond, with a credit derivative component. The primary purpose of a CLN is to transfer credit risk from one party to another.

In essence, a CLN is a bond whose performance is linked to the creditworthiness of a reference entity or entities. The issuer of the CLN makes regular coupon payments to the investor. However, the principal repayment at maturity is contingent on the credit performance of the underlying reference entity. If the reference entity experiences a credit event, such as a default or bankruptcy, the investor may lose some or all of their principal.

CLNs offer investors the opportunity to gain exposure to credit risk without directly holding the underlying debt. They can be structured to reference a single entity or a portfolio of entities. The pricing and structure of a CLN are influenced by factors such as the credit quality of the reference entity, the tenor of the note, and the prevailing market conditions for credit derivatives. For issuers, CLNs can be a way to hedge credit exposures or to create customized investment products.