Hi, could someone kindly explain how the issue spread relates to the issue price of a bond? Understand that bonds are priced over treasuries, but how does that work?

Hello, In the US - bonds are priced over treasuries. In Europe they used to be priced over Euribor and now over Overnight rates. This does not mean that they are floating - for most of them and unless mentioned, they have a fixed coupon, it is just for 1) help in the marketing process 2) pricing strategy and comps removing treasuries movement 3) some investors having specific investment strategies (L/S) The way it works is the following: on issuance day, the bond issuance process is arriving at - in the case of the US - a target spread over treasuries e.g.

Difference between the issue spread and price for a bond

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Difference between the issue spread and price for a bond

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