It stands for credit-linked deposit; a credit-linked hybrid that combines a deposit with a credit default swap that the investor (depositor) sells to the deposit taker. The principal amount of the deposit payable at maturity is linked to a specific credit event. That is, it may be reduced upon the occurrence of a given credit event(s) relating to an underlying issuer (obligor) or reference debt instrument. More specifically, the default contingency can be based on a specific underlying asset such as a corporate loan or security, a portfolio of loans and securities, or generally any type of contract that is associated with credit exposure. The holder of the deposit account is the seller of protection, whilst the issuer is the buyer. If a credit event occurs during the tenure of the deposit, the deposit amount will be paid and the depositor would receive the deliverable obligation instead of the deposit amount.

It is also known as a credit-linked certificate of deposit (CLCD).