A new credit risk model for credit derivatives is introduced in this paper. It uses a framework based on the Libor market model for interest rates. The model calculates forward rates and credit spreads as lognormal processes, with recovery modeled as a fraction of the defaulted claim value. The model's survival-based pricing measures help in pricing defaultable payoffs and determining the dynamics of forward rates and credit spreads without arbitrage. It can be calibrated to bond prices, swap rates, and default swap rates, with closed-form solutions available. Approximate solutions with high accuracy exist for options on default swaps and credit spread caps. An exact pricing formula for options on default swaps is achieved in a modified framework using the default swap measure.