Credit-linked structured products offer investors the opportunity to pursue significantly higher yields compared to the risk-free rate and provide an alternative to traditional corporate bond investments.
In the early 2000s, the popularity of credit default swaps and other credit instruments surged, driving strong interest in this sector. However, these products became unpopular following the real estate bubble, the credit crunch of 2007, and the collapse of Lehman Brothers in 2008. The complexity and lack of transparency surrounding credit-linked products escalated to unsustainable levels, with many market participants severely underestimating the credit risk posed by banks and major corporatio