factors driving the difference between CDS spread and Cash Spread

--CDS spread often trade with a higher beta, higher volatility --the main determinant of the difference between CDS sprd and Cash sprd is the level of credit risk. When credit risk is rising, demand for buying protection rises and the basis becomes more positive. When credit risk declining, the opposite occurs. --repo rate might be high to prevent aribtraging positive basis. effective basis equals to the CDS, minus cash spread and repo rate. Also, repo market often drys up when the credit spreads widen, so that an investor may be unable to find the bond to borrow. --the demand of synthetic CDO market impact the CDS spread. e.g less demand of CDOs caused by subprime backed CDOs widen CDS spreads ove a wide spectrum of credit market --individual name CDS is more liquid ove cash