Dollar swap spread swings are making swap locks a shakier proxy for the Treasury yields corporates price new bonds off. Treasurers hedging ahead of issuance now have to question the instrument itself,

What happened: Volatility in dollar swap spreads is complicating how US corporates choose instruments to hedge interest rate risk on upcoming bond issuance, with treasurers questioning whether swaps remain a reliable proxy for the Treasury yields their debt is priced off. Why it matters: Many issuers that hedge ahead of a bond issuance rely on swap locks, forward-starting pay-fixed interest rate swaps, and swings in the spread are prompting them to rethink that approach.

Volatility in dollar swap spreads is complicating how US corporates choose instruments to hedge interest rate risk on upcoming bond issuance, with treasurers questioning whether swaps remain 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, and swings in the spread are prompting them to rethink that approach.