That credit default swaps are very useful tools should come as no surprise to the readers of this blog. Now even ordinary non-financial firms (Nokia) has understood this and Nokia has started to use the CDS market to get loans.
In these days of scarce credit this should be a welcome trend in Europe where this avenue allegedly hasn’t been widely used up until now. By linking its bond rate to the CDS spread, Nokia might find it easier to get funding. At least that is the point. I believe this to be a natural way of pricing loans and I am a bit surprised that the approach isn’t already in use in Europe. In the US it seems to be a more widespread custom.
