Technical Update Extra (TT May05 p50-52)

The Treasurer May 2005

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The relationship between CDS and bond spreads
Growth in the credit derivative market means that the CDS has become crucial to corporates as they seek to understand the bond markets and monitor investor appetite for funding opportunities or buybacks. This review discusses the pricing methodology of the basic credit default swap, the equivalent spread measure for corporate bonds, considers how CDS and bond spreads relate to one another, and how CDS may on occasion drive bond spreads.

Related keywords and elements of treasury
Essential elements of treasury
Keywords
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