We provide a comprehensive empirical analysis on the implication of CDS-Bond basis arbitrage for the pricing of corporate bonds. Basis arbitrageurs introduce new risks such as funding liquidity and counterparty risk into the corporate bond market, which was dominated by passive investors before...

Dollar-denominated emerging market bonds are marketed to investors as a vehicle for gaining exposure to emerging fixed income markets while avoiding exposure to currency risk. However, the development literature suggests that dollarization of debt leads to increased probability of financial...