Re-issue of the first XAIA-Institute article!
Investing into a bond and at the same time buying CDS protection on the same bond is known as buying a basis package. Loosely speaking, if the bond pays more than the CDS protection costs, the position has an allegedly risk-free positive payoff known as "negative basis". However, several different mathematical definitions of the negative basis are present in the markets, all of them appearing reasonable on the first glimpse. The present article dares a second glimpse and introduces well-known and innovative measurements of negative basis, explores their properties, and discusses their pros and cons.