The Deriveum Market is global and covers both sovereign and private USD denominated bonds. Bonds where our collateral can be used to back economically viable deals are the high-risk segment, which encompasses around around $7 trillion globally. We aim to a turnover of $20 billion by year five of operations or 0.2% of the addressable market.

The Deriveum World (USD denominated) product will be initially targeted to large sovereign or sovereign-backed bonds in developing economies. Those bonds have considerable advantages such as relatively clear haircut expectations in a default event based on historical precedents. Further the tranches of those bonds are fairly large and have very transparent CDS value. On top of that sovereign and sovereign-backed bonds are historically clear-cut as far as credit event determination is concerned. Further those bonds tend to be with much longer duration and prime interest for fixed income investors such as pension funds and other hyper conservative players.

The emerging economies sovereign and sovereign-backed debt denominated in USD exceeds $4 trillion, and at least half of it (high risk debt) has sufficient yield to CDS ratio to make it suitable for Deriveum collateralization. The Covid 19 Pandemic is likely to increase the size of that market.

Debt investors will be willing to buy debt provided that payment is guaranteed and yield after CDS premium is higher than the corresponding AAA-rated security (usually US or German bond).

For a financial institution if the cost of attracting additional financing is lower than the insurance premium it is worth buying Deriveum to backstop the CDS.

Please check the examples of use for details on how each party has substantial financial incentive to utilize Deriveum or contact us.


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