how is the spread of an asset swap calculated 
there are two components used in calculating the spread for an asset swap the first one is the value of coupons of underlying assets minus par swap rates the second component is a comparison between bond prices and par values to determine the price that the investor has to pay over the lifetime of the swap the difference between these two components is the asset swap spread paid by the protection seller to the swap buyer example of an asset swapsuppose an investor buys a bond at a dirty price of 110 and wants to hedge the risk of a default by the bond issuer she contacts a bank for an asset swap the bond s fixed coupons are 6 of par value the swap rate is 5 assume that the investor has to pay 0 5 price premium during the swap s lifetime then the asset swap spread is 0 5 6 5 0 5 hence the bank pays the investor libor rates plus 0 5 during the swap s lifetime investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal 