(JOSH BIRNBAUM) "Our desk began to accumulate short positions, purchasing protection on individual securities through credit default swaps, largely from external C.D.O.managers who asked us to bid for these positions."

VOA: special.2010.04.30

Either way, it was confusing enough to make voters default to their partisan positions.

ECONOMIST: Introduction

Although there are ISDA rules to cover such events, the sheer size of Lehman in the market (its gross derivatives positions will be hundreds of billions of dollars) makes this default a severe test.

ECONOMIST: The fallout from the bankruptcy of Lehman Brothers

Another benefit is that bond funds spread out their positions over many individual issues, and this can reduce credit (default) risk.

FORBES: 5 Reasons Why Bond Funds Can Help You Navigate Bond Market Headwinds Successfully