CDS basis is a term referring to the difference that can occur between corporate bond spreads and CDS levels.
As M&G’s Carlo Putti explains, one of the good things about being a bond investor is the number of instruments that exist and different ways that these can be used to express investment views.
In this video, he provides a refresher on CDS (credit default swaps), and explains why a company’s CDS may not be exactly correlated with its credit spreads. Taking advantage of any difference is just one way that bond investors can make money.
