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WSO Free Modeling Series - Now Open Through
April 30, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
There's no rule against it, but it can be tough for a few reason: a) Corporate bonds are in high denominations (usually $1000 and up) so making trades at low levels is hard b) Corporate bonds are less liquid than equities with each issue traded OTC by market makers, most of whom won't care to do business with anyone not making large trades and/or will give you shitty pricing
To trade bonds you need to be an decently sized institutional investor. Like have $50mm of balance sheet, if not more. Reason being is to get decent pricing you have to trade in blocks of $1mm and greater, but if those aren't deterrents then go ahead.
And Corporate bonds are liquid not as liquid as equities with actual quoted prices at exchanges but they are not any where close to other parts of the bond market.
I don't think you even know what you're asking. Trading "equity spreads"? And you don't trade "bond spreads", you trade bonds on spread, which wouldn't be logistically different than trading bonds, you'd just hedge yourself by selling treasuries short.
Thanks for the primer on capital structure arbitrage.
In any case he is using awkward terminology which means he probably wouldn't know what he's doing.
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