5 year CDS starts life at 19bps (via cmadatavision)
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jck,
Thanks so much!
-Joe Hill
The ecb has a small buy program of so-called covered bonds. so far they bought 32 bn euros (in 6 months) with an eventual target of buying up to 60 bn euros.
jck,
I know this comment doesn’t deal with the original post, but has the ECB undertaken any form of quantitative easing? I know that there was always debate, but I can’t seem to find any record of sovereign debt purchases or asset-backed purchases or what have you from several google searches that I have run. Do you happen to know the answer? Thanks in advance for your help, and thanks for such an awesome and wonkish site!
-Joe Hill
Well I answered on twitter: a positive cds premium exists for any corp not expected to last eternally…(i.e hazard rate = 0 means corp will never die). so unless you think google will last forever there is a cds spread regardless of whether there is a deliverable bond *today*
meanwhile thx to the cds market, you can build yourself a synthetic google bond.
How do you craft a CDS on a reference entity that has no debt on which to default? What types of obligations could they default on? OTC derivatives? Trade payables? I guess that would rule out physical settlement.