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Synthetic inflation linked bond

This is a discussion on Synthetic inflation linked bond within the First Steps forums, part of the Start Here category; Hi everybody. I am not quite sure if this thread fits in the chosen sub forum. Since I am not ...

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Old Oct 10, 2008, 7:56am   #1
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Synthetic inflation linked bond
Hi everybody. I am not quite sure if this thread fits in the chosen sub forum. Since I am not that experienced in trading, I figured my question would fit best here.

As far as I know, one can synthetically create an inflation linked bond of a certain issuer by simply buying the bond of the issuer and entering as an inflation buyer into a series of zero coupon inflation swaps (each on each payment date of the bond).

My question is: is it possible to synthetically create inflation linked bonds using asset swaps?

I thank you very much for your valuable time.

Kind regards

Dave
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Old Oct 10, 2008, 8:43am   #2
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Re: Synthetic inflation linked bond
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Originally Posted by Meidav View Post
. . .
As far as I know, one can synthetically create an inflation linked bond of a certain issuer by simply buying the bond of the issuer and entering as an inflation buyer into a series of zero coupon inflation swaps (each on each payment date of the bond).
There's more than one type of inflation-linked bond. This is, theortecally possible but, in practice, would be far more hassle than it's worth from an administrative perspective.
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My question is: is it possible to synthetically create inflation linked bonds using asset swaps?
I don't understand where you think the inflation hedge is gonna come from just using asset swaps?
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