The Yield Curve: A Graphical Representation of Bond Yields
The yield curve graphically represents the returns offered by bonds from the same category of issuers, based on their maturities. This tool is essential for institutional investors to build their strategies.
The Reference Curve: Government Bonds
The reference curve remains that of government bonds. Its shape informs about default risk expectations and reflects institutional investors' expectations regarding inflation and future interest rates. A flattening of the curve is not a good macroeconomic sign.
Tunisia Clearing Launches Corporate Yield Curve
In December 2023, Tunisia Clearing launched a corporate yield curve. The testing phase allowed for refining the assumptions, and three curves are now in the testing phase, representing the bond market for three sectors: banking, leasing, and microfinance. You can consult them at the following link: CorporateSector
Methodology
For banks, subordinated bonds were considered, while ordinary bonds were retained for leasing and microfinance. The Z-Spread method was adopted, recommended when the market is not liquid or when risk assessment by rating agencies is not a widespread practice. The data considered come from both the primary and secondary markets.
Following the Evolution of the Curves
We will closely follow the evolution of these curves throughout the year. They will provide valuable and useful information for managers' decisions.
