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#asset-swap #finance #gale-using-and-tradning-asset-swaps
In par/par asset swap, the coupons received by the buyer are netted off against matching fixed payments to the seller on a swap for the life of the bond.
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owner: piotr.wasik - Using and Trading Asset Swaps - Giles Gale (Morgan Stanley), p6

e par/par s wap spread, we think of the asset swap as constructed in the fo llo wi ng way: • The bond is sol d for par. The swap dealer (often the seller) ‘lends’ the buyer by P-100, where P is the full market price of the bond. • <span>The coupons r eceived by the buyer are nette d off against matching fixed payments to the seller on a s wap for the life of the bond. • The bu yer’s receipts on the floating leg of the swap are adjusted by a fixed spread suc h that the present value of the swap equals the upfront implicit loan of P-100. The formul



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