Can Philippine CDSs Trade Inside Indonesia?

Back in September 2005, we suggested that Philippine 5-year credit default swaps (CDS) were looking strong, and would outperform their Indonesian counterparts. At the time, the former was trading at 367bps, and the latter at 280bps. Since then, the Philippine CDS has enjoyed a tremendous rally, causing its spread to narrow to a record low of 223bps on January 10. Over the same period, Indonesia’s CDS also rallied, touching a low of 190bps on January 20, but the Philippine instrument has enjoyed a better run. Consequently, the spread between the two CDSs has compressed from around 90bps to a low

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