5566

The above trade does not make sense as it is not riskless arbitrage

You cant short CDS (sell protection) and long bond at the same time because if the bond defaults then you have to pay the (Par-market) to protection buyer and you will end up poor.

The trade should be
long bond and receieve 60 bps
long CDS (buy protection) and pay 46bps

Resulting in negative basis trade to earn you 14bps

Think CDS premium - asset spread = negative basis = profit of 14bps = good thing

From your example sell cds and buy bond = 40+64 = 104 bps income, which will be washed pretty quickly when the bond defaults