Compared with default swaps, credit-linked bills reduce counterparty risk, so institutions with credit risk hedging needs are more willing to adopt this approach.

A concrete example of credit-related bills. Credit card companies issue bonds to raise funds. In order to reduce the credit risk of the company's business, the company can take the form of a one-year credit contact form. The bill promises to repay the investor's principal and pay 8% interest (higher than the average interest rate of similar bonds) when the average fraud rate of credit cards in China is less than 5%; When the index exceeds 5%, pay the principal and 4% interest. In this way, credit card companies use credit contact forms to reduce credit risk. If the average credit card fraud rate is less than 5%, the company's business income is guaranteed and the company has the ability to pay 8% interest; When the average credit card fraud rate is higher than 5%, the company's business income is likely to decrease, and the company can pay less interest, which is equivalent to buying credit insurance from investors to some extent. Investors buy this credit-linked bond because it may get a higher interest rate than ordinary similar bonds. In this example, the buyer of bonds is the provider of protection, because when he buys bonds, he also buys credit-linked bills attached to bonds; The issuer of the bond, namely the credit card company, is the demand side of the guarantee; The credit risk to be avoided is the credit card business that credit card companies are engaged in.