CDS Level

CDS means Credit Defaul Swap in which the CDS buyers swap the credit risk of the underlying party to the CDS seller, in return the buyers pay insurance premium to the seller, withtn the time period specifed in the contract. If the underlying party defaults, the protection buyer can get back the whole principal from the seller. As the CDS premium is expressed in basis points for example: 50 bps p.a. (0.5%). That's mean the buyer has to pay 0.5% of the protected principal to the CDS seller. If the principal amount is USD 1 million, then the buyer has to pay USD 5,000 for the insurance. I think the level depends on the tenor (time), the underlying party and the principal amount.