Credit linked note (CLN)

[Kostyalou]

What does it mean: 'above market rate' ? Does the CLN issuer have to pay more than the reference bond coupon if there is no downgrade? If yes, then this downgrade or even default of the reference company is beneficial for the Bond owner. So what's the use of all these things for the system?

[missedagain]

So just to clarify, in the case of default by the reference issuer:

The CLN writer will only owe the CLN buyers whatever they can get from the reference issuer? So if the CLN buyers initially handed over $10MM in cash to the CLN writer, but the CLN writer could only recover $3MM from the reference issuer after default, that's all the CLN writer owes the CLN buyers?

[mmagar5754]

Does the bond owner mean an amortized loan for the construction of a factory or the need for working capital, for example?