Question on relative value of bonds
Hi guys, I am seeking some clarification on how buy-side credit analysts value corporate bonds. My understanding is that the process involves the following:
1) Construct a spot rate curve with spot rates for the maturities of each coupon and principal payment;
2) If the bond is option-free solve for the z-spread that makes the present value of future payments equal to price. If the bond has an embedded option calculate the OAS.
3) Conduct credit analysis on the issuer to determine its credit risk.
4) Compare the bond's spread to other bonds of similar maturity and credit risk.
Is this correct?
Does a credit analyst on the buy side get to make curve or duration position calls or is that left to the PM?
Thanks and I appreciate your input!