why OAS is zero when benchmark is issuer-specific? I think still could have some liquidity risk. thanks.
it could… they just assume it wont in these discussions.
hw0799 Wrote: ------------------------------------------------------- > why OAS is zero when benchmark is issuer-specific? > I think still could have some liquidity risk. > thanks. It is not always zero. It could have a positive or negative OAS compared to the issuer’s benchmark. If its OAS=zero, it’s fairly valued. If its OAS>zero, then its cheap and you should buy it, etc.
i am pretty sure hw0799 was asking as to why OAS of 0 is cosidered fairly valued… i am sure he knows OAS can be diff than 0…
i would guess that if you’re comparing the bond to a similiar bond from the same issuer that also has an embedded option, the optionality will cancel each other out so OAS will = 0.
yeah… unless they choose a benchmark with very similar term and strucure. Different structure could impact the liquidity. gulfcfa Wrote: ------------------------------------------------------- > i am pretty sure hw0799 was asking as to why OAS > of 0 is cosidered fairly valued… > i am sure he knows OAS can be diff than 0…