Syndicated Loan on Bloomberg

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106 B lo o m b e r g M a r k e t s February 2003 FO CUS S yn d i c a t e d L o a n s Comparing a Syndicated Loan With a Bond Use the Asset Swap Calculator to evaluate pricing spreads. B y ‚how do you determine whether an John Bridge the top of the screen. However, the OAS isn’t directly comparable to the discount margin because of the way the OAS gets calculated. The OAS uses unique current spot, or zero, rates to discount cash flows according to their terms along the entire swap curve. For example, the OAS discounts a cash flow received in six months at the six-month spot rate. The OAS is the number of basis points added to each unique spot rate to get to the current present value of the bond, while the discount margin is…show more content…
To analyze the three-month forwards in three-month intervals from the Implied Forwards Curve screen, tab in to the Forwards fields and enter 3 and MO. Tab in to the Intervals fields, enter 3 and MO and press to display the graph. the asset swap Calculator (ASW) function converts a bond’s fixed-rate cash flows into an equivalent swap spread over Libor. Type AW 7.375 1/1/04 ASW . Tab in to the Bond Price field at the bottom of the screen, and enter the market price. Press , and the true spread over three-month Libor appears in the red Spread(bp) field. That’s comparable to the syndicated loan’s discount margin to the next refix date. As of Dec. 10, the Allied bond yielded 421 basis points more than threemonth Libor compared with 253.8 basis points for the loan. The bond’s wider spread makes sense in terms of the assets’ respective risks of default. The loan and the bond have similar credit ratings. However, if Allied Waste entered bankruptcy, its loans would have repayment priority over its corporate bonds. Investors demand a larger spread premium to compensate for this greater risk.„ JOHN BRIDGE is on the staff of the Bloomberg Product Training department in New York. jbridge@bloomberg.net • Analyzing the Forward Curve Type FWCV US 3 to graph implied forward rates and spot rates. • The Asset Swap Calculator Function Type AW 7.375 1/1/04 ASW to evaluate an Allied Waste Industries

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