CDS - Cheapest to deliver

When it is the “cheapest” ….
lowest price that you would deliver among all the bonds of similar maturity, etc. etc. available with you.
 
what is the logic of this? So you would look at all the factors (maturity, coupon, etc.) and determine the price based on that?
 
The prices are set by the market. The basic concept here is that the short position has an option to deliver “deliverable issues” that allows it to maximize profit or minimize losses. That will be established by the market prices on the deliverable issues (or the implied repo rate, which is more or less the same thing as a market price).
 
On the day that the short has to deliver its bonds, it looks at the market prices of all eligible bonds, compares those prices to the conversion factors, and buys the deliverable set of bonds that cost the lowest amount of money.
 
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