medium · Debt Capital Markets pricing-yields-curve
Which scenario best illustrates 'Negative Basis' in the credit markets?
- The cost of U.S. dollar funding in the repo market is higher than the effective cost via a cross-currency swap.
- An issuer's 10-year bonds trade at a tighter spread than its 2-year bonds.
- A corporate bond trades at a spread of 250 bps, while the 5-year CDS on the same issuer trades at 210 bps.
- A bond's yield to maturity is lower than the yield of a benchmark Treasury of the same tenor.
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