bond-relative-value

Spread decomposition reveals true bond richness or cheapness by breaking total spread into risk-free G-spread, credit curve, and residual components, isolating the residual effect to show whether observed spread compensation is genuinely sufficient.

Stress test bond relative value by running parallel rate shock scenarios from -100bp to +100bp shifts, validating whether the initial rich or cheap conclusion holds consistently across both upward and downward interest rate movements.

The residual component in spread decomposition represents the remaining bond valuation gap after subtracting risk-free G-spread and credit curve effects, serving as the primary signal for identifying genuine richness or cheapness.

Yes, bond relative value analysis supports peer and basket comparisons, allowing you to benchmark a target bond against peers to determine if observed spread compensation aligns with rates and credit fundamentals.

Yes, bond relative value analysis requires chaining bond price data with interest rate curve and credit curve inputs to compute G-spread and credit-residual splits accurately before drawing rich or cheap conclusions.

Raw spread and yield information fails to clearly separate rates, credit, and residual effects, requiring spread decomposition to isolate the true drivers behind bond richness or cheapness for accurate valuation.