Skip to content

Market participants prefer the swap-rate curve over the government bond yield curve because?

May 28, 2016
  • The availability of swaps and the equilibrium pricing are driven only by the interaction of supply and demand. It is not affected by technical market factors.
  • The swap market is not regulated which makes swap rates across different countries comparable.
  • Swap curves across countries are more comparable than sovereign bond yield curves because swap curves reflect similar levels of credit risk.
  • Swap curve has 11 maturities between 2 and 30 years. U.S. government bond yield has 4 maturities.
Advertisements

From → Asset Valuation

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: