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#asset-swap #finance #gale-using-and-tradning-asset-swaps
The par/par methodology therefore allows an investor to be exposed only to the idiosyncrasies of the bond issuer rather than taking interest rate risk - when you receive LIBOR based cashflows rather than fixed cashflows, there is no interest rate risk. (There is a small residual interest rate risk due to the difference between the discount factors based on the government curve and those based on the swaps curve.)
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owner: piotr.wasik - Using and Trading Asset Swaps - Giles Gale (Morgan Stanley), p5

sset-swapped bond is like a floating rate bond, whose onl y net cash flows are the floating receipts, which are based on a constant spread to Li bor. This spread reflects fact ors affecting the price of the bond outside of duration. <span>The par/par metho dology therefore allows an investo r to be exposed only to the idiosy ncrasies of the bond i ssuer rather than ta king inter est ra te risk. 1 For this reason, the par/par asset-sw ap is particu larly popula r in credi t, for inve stors who want to ta ke a view on a credit, bu t not interest ra te risk. Investors will al



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