I need to price a 5 year gbp par bullet bond issue, with price,
I need to price a 5 year GBP par bullet bond issue, with Price, Coupon, Yield to Maturity and Modified Duration.
I need to use data of the UK treasury bonds as attached (they are from March 2013).It is said that Bank’s equity analist and Debt analyst suggest that a yield of 2.47% incorporating a Z-spread for the company of 150bps over Treasury would be appropriate to attract investors.
It can be assumed that coupon payments are annual and that we are pricing on a coupon day (no accrued interest) and I may ignore basis conventions.
I need to make the process and methodology clear with explanations at each stage. (This is an important point)
Note: It says I need to use the T-note data to bootstrap a zero coupon treasury curve and apply the Z-spread to price the bond so that it has a coupon and yield making the bond price close to par. It says I can use the PV and RATE functions in Excel, but can also use PRICE and YIELD (although the PV and RATE may be easier here)
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