Insurers urged to explore positive basis trades

market graph

Insurers should take advantage of positive basis between European government bonds and their associated credit default swaps (CDSs) to gain a yield enhancement in the current low interest rate environment, according to bankers.

Positive basis exists when the spread on a CDS is greater than the spread on its underlying bond. Where this situation exists, insurers can sell their government bonds via the repo market and sell CDSs on the same name, thereby benefiting from a premium generated from the

To continue reading...

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: