The CFA constantly refers to spot, par and forward rates for valuation of bonds. I understand that from obtaining par rates (with maturities that match the cash flows from the bond you are trying to value) you are able to derive the spot and forward rates.
My question is, in real life, where are these par rates obtained from? Are these par rates obtained by literally looking for Govt. securities (with the maturities that you require to value the bond you are trying to value) trading at par, and then taking their YTMs to form a par curve? How easy is it in real life to find enough Govt. securities (to match the maturities of the bond you are trying to value) trading at par?
If this is the case, when using these spot rates (derived from the par curve using Govt. bonds), would a fixed income analyst then add a z-spread to the spot curve (derived from looking at similar bonds) and then use the spot + z-spread to value the target bond?
Why could the analyst not just derive a par curve directly from comparable bonds? (is this because it is unlikely that you will find enough comparable bonds trading at par?).
Any input would be greatly appreciated! Thanks in advance