can someone shed some light - say a company issued new bonds yesterday (across various maturities) and someone comments that the 5s/10s curve was unnaturally flat. what are they referring to?
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Not sure but I would imagine they are talking about the spread between the 5-year vs. 10-year treasury bond rates.
No. They were referring to the issuer's credit spreads on the new 5yr paper vs the new 10yr paper.
Implies: market is telling you that the default probability between yrs 5 & 10 is very low. Either that, or the paper will get par recoveries (in which case, he default probability is irrelevant). Or, nobody cares about getting a fair yield on longer term paper anymore.
Cries - any place i can see this visually? Say new 5yr bond was priced @ T+60 and new 10yr bond was priced @ T+105
Then your 5s/10s curve is 45bps.
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