Because OAS is a spread that is added to each point on _ forward rate derived from _ the (non-zero volatility) spot curve to create the spot _ forward _ discount rates used to discount the bond’s cash flows.
The nominal spread is the difference between the subject bond’s YTM and the YTM of a Treasury (or risk-free bond) of the same maturity; because it is a spread added to the YTM, it’s added to the Treasury (par) yield curve: the curve that gives YTM as a function of maturity.
I find this so confusing. Schweser qbank is telling the same. It seems to me that OAS is added to the non-zero volatility forward rates. How is it the same to say that OAS is added to the spot rate curve (even if forward and spot are closely connected)?
Is it true that OAS is added to Zerovol forward rates for risk-neutral pricing, and in a separate valuation methodology OAS is added to non-Zerovol spot rates to price a bond in market?