A companys 5-year CDS trades at a credit spread of 300 bps, and its 10-year CDS trades
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A company’s 5-year CDS trades at a credit spread of 300 bps, and its 10-year CDS trades at a credit spread of 500 bps.
The company’s 10-year spread is unchanged, but the 5-year spread widens by 500 bps. Describe the implication of this change in the credit curve.
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