South African banks grumble over credit pricing discrepancies

To charge, or not to charge?

greg-waksman

It’s a simple choice: faced with two quotes for a swap from two banks perceived to be of a similar credit, where one quote is several basis points cheaper, most people would go for the low-cost option. End-users across the globe face this kind of decision every day – and there are various explanations for the discrepancies. The two dealers might be using different discount rates to value the swap; they might have different views on the credit of the customer; one might be willing to swallow

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