I understand CDS's are often employed in trading strategies between institutions - That is well publicized. What isn't as publicized is how other customers might look to use a CDS.
I work in an industry where it is rare to ask for collateral or prepayment (mid-size services vendor) - and where asking for those special provisions could easily cause loss of a customer due to the extra paperwork. On to the questions
- Do services companies (or vendors of other types which I may be less informed about) ever seek out and purchase CDSs as a form of protection from a customer default that they can get unilaterally?
- If this does not occur, is this because the market is inaccessible to such entrants or because the users are ignorant/wary of the market?