QuoteOriginally posted by: StructCredThe first question is - what currency are you hedging to? You mentioned your bond is in your local currency. Are you happy to receive flows in this currency and just want to hedge out the credit risk? If that's the case, cross currency basis swap won't be a hedge at all. Since CDS is an unfunded instrument, it gives you very little fx risk (only for PV of the contract rather than notional). To hedge your credit risk of your bond in this case you want a quanto CDS. Some dealers will offer you quantoed protection in a few currencies (but it will cost you). Alternatively you can dynamically hedge with CDS in foreign currency. You can in theory build a full model for cross currency basis + correlated credit and hedge on that or if you assume that credit is uncorrelated to the currency pair, just hedge with notional adjusted for fx.My functional currency is domestic and I am interested in pricing a bond issued in domestic currency by foreign entity. The quanto adjustment for the spread is probably something I need. Is the method described in this thread up to date, or methodss have evolved over time, since it is pretty old paper?Hence the domestic currency is pretty exotic, and the issuer is a multinational, I definetly may assume no correlation between default and fx. What exactly do you mean by hedging with notional adjustment for fx? would you keep notional multiplied by PD exchanged into foreign currency of a CDS?