The credit default swap (CDS) market is one of the purest and most responsive indicators of corporate financial health.  Since the release of ISDA's "Master Agreement," CDS transactions have become simpler and CDS markets have become available to a whole new universe of investors.  As Goldman Sachs expressed in a bulletin published in May 2001."... use of default swaps will increasingly become a necessary component of any successful portfolio management...

Barra Credit, a breakthrough solution to the challenges faced by managers who deal with credit risk.  By using quantitative, market-implied measures of credit risk from the equity, bond and derivatives markets, it allows the user to see the potential for default sooner and with greater certainty, in spite of imperfect information.  Because it is web-based, Barra Credit is easy to use and allows users to monitor, screen and analyze credit-risky assets faster than ever before....

This article outlines a new process for managing credit asset portfolios.  It combines techniques to produce an approach that relies on relative value, market-implied credit measures and risk control along with fundamentals.