Core Viewpoint - The expansion of credit derivatives in the technology bond market is accelerating, serving as both a "risk mitigator" and a "confidence amplifier" for financing [1][2][6] Group 1: Role of Credit Derivatives - Credit derivatives are becoming a key mechanism to address financing challenges for technology enterprises by reducing credit risk through external mechanisms [2][6] - They enhance market confidence and improve financing efficiency by connecting issuers and investors, thereby alleviating concerns about repayment capabilities [2][3] - The use of credit derivatives allows for better risk management for investors, enabling them to hedge against valuation risks associated with high-volatility technology bonds [3][6] Group 2: Recent Developments - Several financial institutions, including Bank of Communications and Shanghai Pudong Development Bank, have successfully completed credit derivative transactions linked to technology enterprises, marking a significant step in the development of the technology bond market [4][5] - The first credit derivative transaction involving a technology enterprise was completed by Bank of Communications, providing credit risk protection through a credit default swap (CDS) [4] - The issuance of a 300 million yuan credit derivative transaction by Shanghai Pudong Development Bank demonstrates the growing acceptance and implementation of these financial instruments [4][5] Group 3: Challenges and Recommendations - Despite the growing application of credit derivatives, there are still institutional shortcomings in capital relief, pricing mechanisms, and legal applicability that need to be addressed [6][7] - The current market shows a lack of participation from commercial banks in credit derivatives due to accounting treatment issues, which may increase capital requirements instead of reducing them [6][7] - Recommendations include clarifying the capital savings potential of credit derivatives, developing a valuation system suited to the Chinese market, and enhancing legal training to mitigate disputes [7][8]