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Credit-linked note (CLN)
A funded credit default swap in which an investor sells protection by buying a bond issued by a dealer or special purpose vehicle (SPVs). If there is a credit event, the principal (or part of the principal) of the note is reduced to the recovery rate.
Some dealers have a medium term note (MTN) issuance programme under which they can issue notes in their name, which are linked to reference entities to which investors want to take risk.
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