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Reasons why the net basis might trade negative from time to time : 1) if a credit crisis occurs, investors do not have the resources to invest in the basis. For example , banks are unwilling or unable to provide repo financing. Or, investors do not have the cash required for the haircut on the repo financing. Hence the basis traded negative during the ...


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I think it has something to do with differences in how Australian banks and EU/JP banks finance themselves. Probably you need someone who is an expert in Australian and European banking structure to explain it properly. I'll attempt an overview: Basically Australian banks have mostly AUD assets, when they issue USD bonds most of the USD proceeds are not ...


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