CDS Curves are Moving to Pre-crisis "Normal"Location: Tokyo As the corporate bond market opened for business this year, it slowly became clear that many corporations, even ones with poor business models, may be able to refinance their debt. The market just has that much appetite for paper. The number of expected defaults in the near-term has dropped off significantly (thanks in large part to all the liquidity chasing yield). That means that the high front-loaded default probabilities of corporate debt in the CDS markets are shifting further out in time and falling overall. The CDS curves that have been highly inverted for some vulnerable names are starting to flatten or even become normalized (spreads increasing with term). As an example consider what happened to Ford CDS in just a month:
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