Reading 39: The shift to a swap-based benchmark for credit

I’m not being able to understand p. 97-99 of this reading. Would someone care to explain this part?

I found the the reading very challenging in general. My take on the last section was that swap spreads have become a more relevant pricing indicator than treasury yields. By swaps, I assume they are talking about standard interest rate fixed/floating swaps. So lenders that are considering granting a fixed rate loan/bond issue are not considering treasury yields or the curve as much as they are considering how they can hedge/repackage their exposure in the swaps market. Fixed income definitely isn’t my strongest area though and this author is definitely a much smarter person than I. Curious what other have to add…

joeisenb, thanks for your help. the technicalities of that reading where they started talking about HOW exactly it happened is what I couldn’t really understand. For example- they illustrated how the 146 basis points diff. betn. the swap and the treasury curve was created… not being able to grasp that stuff.