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Derivatives

  Derivatives   |   Terms
  • 2597
  • October 11, 2020
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Premium Leg

A regular stream of payments made by the protection buyer to the protection seller in a default swap (a credit default swap/ CDS). The proportion of these payments is calculated from a quoted default swap spread which is charged and paid on the face value of the underlying defaultable asset (for which protection is cherished). These payments are regularly made until a credit event takes place or until maturity (of the swap), whichever comes first.

A premium leg is one of the two legs of a credit default swap, with the other being a protection leg.


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