OAS of callable debt is smaller than the comparable non callable debt ?
Z-spread of callable debt is greater than the comparable bon callable debt?
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Is the above two relationship mentioned correct?
So, OAS = Z spread – Call option
For callable bond, value of call option is high and so OAS is lower compared to non callable bond.
Similarly, Z spread = OAS + Call option
Hence, for a callable bond, call option value increase z spread value compared to non callable bond