In addition, credit derivatives allow financial firms to achieve a more diversified credit portfolio by acquiring credit exposure to borrowers with which they do not have a lending relationship. For example, European insurance companies reportedly have used credit derivatives to acquire exposure to European corporations that, because they rely primarily on bank lending, have little publicly traded debt outstanding.
In addition, inflation expectations may rise, if the U.S. economy does not slow considerably in a situation where resource utilization, namely in production capacity and labor, is high.