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#asset-swap #finance #gale-using-and-tradning-asset-swaps
In par/par asset swap funding of the upfront payment will depend on the collateral agreements in place with each counterparty.
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owner: piotr.wasik - Using and Trading Asset Swaps - Giles Gale (Morgan Stanley), p7

eads to the questio n of the correct funding charge to apply. Because the swap and the sale of the bo nd are not independent transactions, to model the spre ad fairly, we need to understand the financing co st of the upfront payment. <span>This will depend on the coll ateral agreements in place with each counterparty. The distortion due to a n inappropriate assumption on the funding can be ver y substantial where a bond trades far from par. The interest rate implicit on the loan of P-100 is Libor



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