CDS Spread Inverting

Our long-held view of spread compression between the benchmark 5-year credit default swaps (CDS) on Argentine and Venezuelan sovereign debt has been amply vindicated in recent weeks, with parity having been crossed and the former now trading 23 basis points below the latter. We originally called for the differential to narrow back on June 3, when the spread stood at 1,031bps, and while the spread could move further in Argentina's favour in the short-term we now take a more neutral stance.

To read the full article, please choose one of the following options: