I’m reading a report on High Yield and wanted some help undertanding the following:
" Interesting development is the continued move negative in CDS bond basis. For High Grade credit this now stands at 34bps which is 4yr most negative level"
"The supply is keeping investors from pushing secondary levels lower as they are getting filled in the primary market ***NO IDEA WHAT THIS MEANS***
It is also responsible for the negative basis development as supply impacts bonds more than CDS.
What are they trying to compare here? Why is it critical to look at high grade CDS basis and its “stubbornly negative amid record supply and is almost at its post-crisis most negative level”
what does all of this imply? / Predict?
Thanks!