A sovereign or highly-rated debt instrument or an equity index price that is used to provide a basis for a contingent payment in connection with a market risk or credit risk. Broadly speaking, an underlying asset of a contract or a transaction (or an instrument/ product) can be any type of asset that has a market value or is affected by a market variable, or is itself a market variable (such as an interest rate, exchange rate, etc.)

In a specific context, a reference asset refers to it an underlying asset for which a debt holder is protected against the credit risks associated with a borrower by means of a credit derivative. Examples of reference assets include bonds, notes, or broadly fixed-income securities, and debt-backed security. Payments against such asset are calculated under a credit derivative contract.