Swap spread swings push US corporates to rethink locks
Volatile swap spreads have issuers weighing a shift from swap locks to costlier Treasury locks for pre-issuance hedges
Volatility in dollar swap spreads is complicating US corporates’ choice of instrument for hedging interest rate risk on upcoming bond issuance, as treasurers question whether swaps are still a reliable proxy for the Treasury yields their debt is priced off.
Many issuers that hedge ahead of a bond issuance rely on swap locks – forward-starting, pay-fixed interest rate swaps – but swings in the gap
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