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#asset-swap #finance #gale-using-and-tradning-asset-swaps
The result of using MVA asset swap as opposed to par/par is that the counterparty exposure is switched from the seller taking the exposure to the buyer taking the exposure - the buyer will get 100 for bond redemption and, given that the swap was on full dirty price of a bond, he will get P-100 from the swap dealer (so the buyer waits for money back, taking the exposure).
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owner: piotr.wasik - Using and Trading Asset Swaps - Giles Gale (Morgan Stanley), p7

MVA method is very similar to the par/par method, but the difference bet ween par and t he dirty price of the bon d is exchanged at maturity rather than at settlement and the floating notional is equal to the dirt y price of the bond. <span>The result is that the counterparty exposure is s witched from one party to the other and the exposure starts low and builds o ver time rather than starting high and reducing. A par/par s wap creates a collateral probl em i mmediately as the s wap starts off-market an



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