Uniformity is a major advantage of CDSs. Bonds are idiosyncratic- every one will has its own maturity date, coupon payments, and lots of minor details in the bo

Uniformity is a major advantage of CDSs. Bonds are idiosyncratic- every one will has its own maturity date, coupon payments, and lots of minor details in the bond covenants. That makes bonds hard to trade. CDS are far more uniform- they trade with standard terms and maturities. Bonds are primarily a way to provide companies with funding, CDS are primarily an instrument for financial companies to trade. Could a company "insure" a bond by writing a swap with a bank? Sure, a bank would be happy to write a bespoke swap with you, but they're going to charge more than a CDS would cost, and you're not going to be able to trade the swap to someone else. CDS actually make it easier for companies to raise money. If you can hedge your weird, illiquid bond with a nice liquid CDS you're more likely to buy the bond in the first place. FWIW I'm not a specialist in fixed income, so don't take this as gospel, but I think the general point is right.