Steepeners flatline

The US and euro yield curves have remained flat for much of the year, heaping misery on those investors that bought billions of dollars worth of CMS steepener products in 2005. Dealers are offering advice on restructuring, but there's only so much that can be done to ease investors' pain

Flat yield curves in the US and Europe have marred the performance of constant maturity swap (CMS) spread option products, leaving investors nursing negative mark-to-market positions with impaired coupons. Some investment banks have reached out to their clients by offering restructuring options and alternative structures. However, the extreme flatness of the yield curve in both the US and Europe has made structurers' task a difficult one, leaving some investors with no choice but to hold onto