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bases

English translation: Basis

13:32 Jun 12, 2009
French to English translations [PRO]
Bus/Financial - Investment / Securities / structured products
French term or phrase: bases
More commentary from a fund investing in various types of structured products. Two examples:

- "Le fort resserrement des indices de crédit sur le mois [...] et les achats massifs de papiers de la part des investisseurs [...] ont conduit à un fort resserrement des ***bases*** (CDS versus Cash) de l’ordre de XXXbp en Europe et XXXbp aux US"

- "Il est à noter que les ***bases*** se sont fortement réduites à l’émission et donc les décotes apparaissent de moins en moins intéressantes"

Scratching my head somewhat with this one... clearly I need to read up on credit derivatives! Any help appreciated.
Rob Grayson
United Kingdom
Local time: 21:39
English translation:Basis
Explanation:
Since iTraxx was introduced, the *basis* between Euro cash bonds and CDS has been greatly reduced. Trading desks have increased their trading volumes substantially, and hedge funds seeking to profit from price inefficiencies between the CDS and cash bond markets have helped tighten the cash/synthetic gap.
http://www.ftmandate.com/news/fullstory.php/aid/891/Credit_D...

Only taking a guess here, but looking around on the net, it seems it could be the case...

This is called a “negative basis” trade because “basis” is the difference between the CDS spread and bond spread (CDS spread – Bond spread).
http://www.acredittrader.com/?p=24

--------------------------------------------------
Note added at 52 mins (2009-06-12 14:25:49 GMT)
--------------------------------------------------

Cash-CDS basis has narrowed dramatically, says JP Morgan
http://www.creditflux.com/Trading/2009-05-07/CashCDS-basis-h...

I wouldn't have thought of "basis" either, I just got lucky by googling "bases CDS versus Cash" ;-)

Always worth googling a good few of the words together to come up with the context.
Selected response from:

Julie Barber
United Kingdom
Local time: 21:39
Grading comment
Thanks, Julie – your answer and references were most helpful.
4 KudoZ points were awarded for this answer



Summary of answers provided
1 +3Basis
Julie Barber


  

Answers


33 mins   confidence: Answerer confidence 1/5Answerer confidence 1/5 peer agreement (net): +3
Basis


Explanation:
Since iTraxx was introduced, the *basis* between Euro cash bonds and CDS has been greatly reduced. Trading desks have increased their trading volumes substantially, and hedge funds seeking to profit from price inefficiencies between the CDS and cash bond markets have helped tighten the cash/synthetic gap.
http://www.ftmandate.com/news/fullstory.php/aid/891/Credit_D...

Only taking a guess here, but looking around on the net, it seems it could be the case...

This is called a “negative basis” trade because “basis” is the difference between the CDS spread and bond spread (CDS spread – Bond spread).
http://www.acredittrader.com/?p=24

--------------------------------------------------
Note added at 52 mins (2009-06-12 14:25:49 GMT)
--------------------------------------------------

Cash-CDS basis has narrowed dramatically, says JP Morgan
http://www.creditflux.com/Trading/2009-05-07/CashCDS-basis-h...

I wouldn't have thought of "basis" either, I just got lucky by googling "bases CDS versus Cash" ;-)

Always worth googling a good few of the words together to come up with the context.

Julie Barber
United Kingdom
Local time: 21:39
Native speaker of: English
PRO pts in category: 18
Grading comment
Thanks, Julie – your answer and references were most helpful.
Notes to answerer
Asker: Thanks Julie – this is most helpful. I must have searched every other possibility (bases, basics, underlying...). Looks like you're on the right track here.

Asker: Yep, sounds like your approach to your "research" when you're absolutely stumped is about the same as mine – feeding various combinations into Google. I didn't get lucky this time!


Peer comments on this answer (and responses from the answerer)
agree  Mark Nathan: Just about to post the same thing. CDS-cash basis. Search this doc for "basis" http://web.mit.edu/joshuali/Public/JObs2/GS Subprime Primer....
4 mins
  -> Hi Mark. Thanks for the link.
agree  joehlindsay: But since it is in the plural in French, you might considered putting the plural of basis: bases..
1 hr
  -> Hi Joehl. Only based on what I saw online, such as this link, I don't think that it would be bases: http://en.wikipedia.org/wiki/Credit_default_swap
agree  rkillings: Yep, stick with the singular.
3 days 18 hrs
  -> Hi Bob. Thanks for the confirmation, as you are our finance person here!
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