Credit derivatives are on a roll. The fastest-growing segment of the derivatives market is scheduled to reach $4.8 trillion (€3.9 trillion) by the end of 2004. The British Bankers Association (BBA) predicts that credit derivatives will grow by $2.1 trillion, or 78%, from mid-2003, when the International Swaps and Derivatives Association (Isda) sized the market at $2.7 trillion.

Meeting the BBA estimates could be tricky. Spreads and margins were squeezed during 2003, affecting banks' revenues and volumes. Few expect the environment to change much during the coming year and the highly competitive market may even begin to see its first departures.