Credit Risk Management with Derivatives

In a portfolio management context, credit risk management is crucial for assessing the risks associated with potential defaults by borrowers in a portfolio. An investment manager is analyzing a portfolio consisting of various corporate bonds and wants to mitigate credit risk effectively.

One method involves using credit derivatives to hedge against potential losses from defaults. The manager needs to decide which type of credit derivative would best serve this purpose, considering factors such as liquidity, cost, and effectiveness.

Which of the following credit derivatives provides the best protection against the risk of default from a single issuer in the portfolio?