The International Swaps and Derivatives Association today announced continued strong growth in privately negotiated derivatives in 2006.

The notional principal outstanding volume of credit default swaps grew 33% in the second half of 2006, rising from US$26.0 trillion at June 30, 2006 to US$34.5 trillion at Dec. 31, 2006. This compares with 52% growth during the first half of 2006. CDS notional growth for the whole of 2006 was 102%, compared with 103% during 2005. The survey monitors credit default swaps on single-names, baskets and portfolios of credits and index trades.

Notional amounts of interest rate derivatives outstanding, which include interest rate swaps and options and cross-currency interest rate swaps, grew almost 14% to US$285.7 trillion in the second half of 2006. For the year as a whole, interest rate derivatives notionals rose 34% over 2005, which is above the annual growth rate of recent years.

Notional amounts of equity derivatives outstanding, consisting of equity swaps, options, and forwards, grew 12% from US$6.4 trillion to US$7.2 trillion in the 2006 second half. Annual growth was 29%, compared with 34% during 2005.

The notional amounts, which total US$327.4 trillion across asset classes, are an approximate measure of derivatives activity, and reflect both new transactions and those from previous periods. It adds that gross credit exposure before netting is estimated to be US$8.8 trillion and credit exposure after netting is estimated to be US$1.6 trillion.

“The privately negotiated derivatives industry continues to experience robust growth, reflecting both continued innovation and the globalization of risk management activity across geographic borders and business sectors,” said Robert Pickel, executive director and chief executive officer, ISDA. “Through our strong global presence, and the active involvement of our members, ISDA plays an important role in fostering innovation, reducing risk and enabling broader adoption of these important risk management tools.”