What is Negative Basis Trading?

Negative basis trading is the concept in the derivative markets is to basically profit from price discrepancies betwen bonds and credit default swaps (CDS).

For example in Asia can be attractive for 'basis trades' because of credit quality

So as in investor you may profit if the difference between bonds and cost of default protection doesnt widen. The following Bloomberg article covers how investors can potentially profit from this type of trading in asia.

For more information - http://www.bloomberg.com/apps/news?pid=20601087&sid=a4ANcA0C7.yg

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