A credit-linked note (CLN) is a security issued by an investment banking firm or another issuer (typically a special purpose vehicle), which has credit risk to a second issuer (called the reference issuer), and the return is linked to the credit performance of the reference issuer.

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A credit-linked note (CLN) is indeed a security whose return is linked to the credit performance of a reference issuer, and it carries credit risk to a second issuer, typically a special purpose vehicle or an investment banking firm.

A Credit-Linked Note (CLN) Is a Security Issued by an Investment