CDS-bond basis narrows on ECB plans, says Markit, as the prospect of unlimited bond buying through the central bank's OMT program prompts credit spreads to rally, with CDS tightening more than cash. "Liquidity is probably playing a major role here," says Markit credit analyst Gavan Nolan, as a scarcity of cash bonds means there are fewer investors willing to sell. Notes the CDS-bond basis has narrowed sharply for Italian corporates. UniCredit's CDS is now trading 9bps inside its bond asset-swap spread, turning the basis negative. Atlantia, Telecom Italia and Enel all saw their basis narrow by at least 50bps this month, but remain in positive territory for now. European credits typically have a positive CDS-bond basis, Nolan says.
Find us on Google+
No comments:
Post a Comment