Bankruptcy, denial and suspension of reference entities, etc. Credit default swap (cds) is a financial derivative product or contract. The insurance conditions of credit default swap include reference entity bankruptcy, payment failure, debt acceleration, denial and suspension. Cds allows investors to "swap" with another investor or offset their credit risk. For example, if the lender is worried that the borrower will default on the loan, the lender can use CDS to offset or exchange risks. In exchange for the risk of default, the lender buys CDS from another investor, who agrees to repay the lender if the borrower defaults.