A client observes that a corporate bond that he is interested in purchasing with a triple A rating has a benchmark spread that is positive when the benchmark is U.S. Treasuries but negative when the benchmark is the LIBOR curve. The client asks you why. Provide an explanation.
Answer to relevant QuestionsWhy is an option-adjusted spread more suitable for a bond with an embedded option than a yield spread? What is a spot rate? What is the federal income tax treatment of accrued interest income on stripped Treasury securities? The bid and ask yields for a Treasury bill were quoted by a dealer as 5.91% and 5.89%, respectively. Shouldn’t the bid yield be less than the ask yield, because the bid yield indicates how much the dealer is willing to pay ...What is a payment-in-kind bond?
Post your question