Does derivative market regulation affect real economic outcomes? We investigate this question in the setting of the central counterparty (CCP) clearing reform on the corporate credit default swap (CDS) market. Exploiting the staggered introduction of CCP clearing to CDS contracts -- an insurance against firm default -- we uncover adverse real economic consequences for affected (non-financial) firms. Firms whose CDS contracts are eligible for clearing with the monopolist CCP lose debt market funding, shrink their balance sheet, cut investment and become less profitable. As a response to the funding short-fall on debt markets, firms increase demand for bank loans. We theoretically motivate two channels through which the CCP environment can adversely affect firms' debt funding situation: the hedging channel -- higher trading costs on the centrally cleared derivative market push hedged investors away from affected firms; and the arbitrage channel -- lower counterparty risk on the centrally cleared derivative market attracts investors from the bond market to the CDS market. Our results indicate that the arbitrage channel dominates the hedging channel.