CDS Price Formula - Errata?

[IluvDerivatives]

Can anyone confirm that this formula is wrong? Should be 1 - not 1 +?

[guest]

this was discussed before, if that helps
https://www.analystforum.com/t/cds-price-bb27/146381

@Ljosh

Thanks Flo,

In summary:

So if credit spread > fixed coupon:
Price of a CDS = 1- (Fixed Coupon - CDS spread) * effective duration

If credit spread < fixed coupon:
price of a CDS = 1 + (Fixed Coupon - CDS spread) * effective duration

Is that correct?

If you know what the absolute value function is |x|=\left\{\begin{matrix}x&x>0\cr -x&x<0\end{matrix}\right. , what he’s saying is

Price of a CDS =\left\{\begin{matrix} 1- (\textrm{Fixed Coupon-CDS spread}) * \textrm{effective duration}&\textrm{credit spread} > \textrm{fixed coupon} \cr 1+ (\textrm{Fixed Coupon-CDS spread})*\textrm{effective duration}&\textrm{credit spread}< \textrm{fixed coupon}\end{matrix}\right. ,
or more compactly,
Price of a CDS =1 +\left|\textrm{Fixed Coupon-CDS spread}\right|* \textrm{effective duration}