30 Year Swaps for the personal account?

October 24, 2008 11:25 AM

Is there a way I can buy the 30 year swap for my personal account?

Right now the 30 year swap is trading at ~4.03...I'd love to make a long term bet where I pay out 4.03% fixed rate and receive floating. The irony is that while I work for a bank and can make that bet in size on my book, I want to do it for personal account and have no idea as to where/why the mechanics of how it would work. Would the account get marked to market/margin called? Is there a way I can buy that swap for straight cash (not sure how this would work, as how could a counterparty take on someone's personal credit risk?). Anyone out there have an idea?

posted by raz5 to work & money (5 comments total)

I understand this isn't quite the same thing, but what about something like TBT, UltraShort Lehman 20+ Year Treasury ETF?
posted by Durin's Bane at 12:26 PM on October 24, 2008

Do you mean buying the debt which backs your mortgage?

Because that has always seemed like a wonderful idea, to me, though I am sure it isn't possible/practical/legal.

If I am barking up the wrong tree, then I apologize.
posted by paisley henosis at 2:30 PM on October 24, 2008

The bigger private banks (e.g. Credit Suisse, UBS) would probably do such a thing for their clients, but it would be subject to margin and you'd likely need to post a decent chunk of up-front collateral.
posted by techrep at 3:25 AM on October 25, 2008

Can someone convert this question to an 8th grade level question?
posted by SirStan at 6:41 AM on October 25, 2008

Thanks for all the responses.

Durin's Bane: you're right, the TBT isn't the same thing, but it something I came across separately about a month ago. I wish I'd known about it earlier. I'm hoping for another dip into the 55 area to pick some up

paisley: i think you mean buying the debt that my mortgage backs. you're right - great idea if there was a way to pull it off and in this market you could get it for a fraction of the notional amount. if you had a way of knowing what deal it was in, it's legal, but 1) there's no way for you to know as that info isn't even remotely public 2) those deals trade in blocks of 5/10/20 million, so retail investors really don't get to play and 3) you're exposed to hundreds/thousands of other loans in the deal, not just your own.

sirstan: i will think about a way to say this in normal terms - i did rant/ramble a bit lol
posted by raz5 at 8:58 AM on October 29, 2008