inflation linked issue

bonosmate · January 19th, 2012, 12:26 pm

Lets say company x has a full nominal bond curve out to 30yr-they now want to issue a 30yr inflation linked bond. The sovereign in which the company is based does not have any inflation linked bonds. How would company x go about arriving upon a suitable real yield apart from engaging with potential investors and seeing where they would be prepared to invest.

Martinghoul · January 20th, 2012, 4:06 pm

Use the swap mkt to extract the some sense of where breakevens trade, I would suggest. It's all rather difficult these days, but you can probably arrive at a r-y level, if you have (and believe) the levels of the various components in the mkt (probably need CDS, as well as nominal and inflation swaps). Regardless, it's probably gonna be largely a "wave finger in air" type of exercise.