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Re: Is there any example using Quantlib for mutli-curve bootstrapping?

Posted by letian on Apr 24, 2014; 4:05pm
URL: http://quantlib.414.s1.nabble.com/Is-there-any-example-using-Quantlib-for-mutli-curve-bootstrapping-tp15189p15196.html

Hello,

I agree with Andres that one can either construct a DualCurveIterativeBoostrap class or derive a FF basis swap rate helper similar to the ois rate helper. To cater the averaging difference, it's possible to insert an averaging type flag in the ois coupon pricer.

Letian

Sent from my iPhone

> On Apr 24, 2014, at 11:52 AM, Andres Hernandez <[hidden email]> wrote:
>
>
> Hi Hengli,
>
> using a different discount and underlying curve is extremely easy in
> QuantLib. The RateHelpers, e.g. SwapRateHelper, accept as parameter a
> discount curve. The parameter defaults to an empty handle. Internally, if
> the discount curve is not provided it is linked to the underlying curve,
> but if it is provided, then the provided curve is used to produce discounts
> independently from the underlying curve.
>
> This will work fine with the EUR curves, as there are more than enough
> liquid OIS instruments to bootstrap the Euro OIS curve first, and then use
> it as discount curve when bootstrapping the different tenor Euribor curves.
> The same is not so easy for USD, where one is likely forced to use
> FedFund-USD 3M Libor basis swaps. In that case I saw two options: implement
> a piecewise-term-structure bootstrapper akin to IterativeBootstrap, but
> which bootstraps the two curves, USD-OIS and USD-3MLibor, concurrently; or
> demand that your environment (I mean wherever you are embedding QuantLib)
> provide also USD 3M Libor vanilla swap quotes. I decided myself for the
> latter, as it was faster, plus USD 3M Libor vanilla swap quotes are readily
> available and liquid for whatever maturity I needed. The vanilla swap I use
> to replace the libor leg from the basis swap, with the fixed leg from the
> vanilla swap*. I end up with an instrument which only depends on the
> overnight index. I then bootstrap USD-OIS first, and then use it to
> bootstrap the libor tenor curves.
>
> *- While I ignore the difference in the averaging of the fed fund rate in
> the FF-swaps and the FF basis swap, this is not a particular issue with the
> second implementation, and would still exist even if implementing the
> concurrent bootstrapping solution.
>
> Mit freundlichen Grüßen / Kind regards
>
> Dr. Andres Hernandez
>
> Senior Financial Engineer
> Business Analytics
> Risk Analytics
>
>
>
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> From:    Hengli Zhang <[hidden email]>
> To:    John Orford <[hidden email]>,
> Cc:    QuantLib users <[hidden email]>
> Date:    04/24/2014 05:15 PM
> Subject:    Re: [Quantlib-users] Is there any example using Quantlib for
>            mutli-curve bootstrapping?
>
>
>
> Thanks John. I guess in multi-curve, the discounting curve is different
> than the underlying curve. (while in single-curve, they are the same). and,
> it still uses all the instruments, e.g. depo, FRA, future, swap. I'll see
> what i can do from the single curve example.
>
>
> On Wed, Apr 23, 2014 at 9:53 PM, John Orford <[hidden email]> wrote:
>  Oh maybe take a look at the swap example then?  I see the discount term
>  structure is created from FRA, future, deposit and swap info.  Then again
>  I may have misunderstood what you're looking for - only skimmed that
>  paper quite a while ago.
>
>
>  On 24 April 2014 10:43, Hengli Zhang <[hidden email]> wrote:
>   Thanks John. This is very helpful. Although it's still single-curve
>   bootstrapping, I may be able to figure out how to do it for multi-curve.
>
>
>   On Wed, Apr 23, 2014 at 8:31 PM, John Orford <[hidden email]>
>   wrote:
>     Hengli,
>
>     The python bond examples included on Github might be of help.
>
>     John
>
>
>     On 23 April 2014 23:30, Hengli Zhang <[hidden email]> wrote:
>      Hi All,
>
>      Just wondering anyone know any sample codes to run a multiple
>      interest rate curve bootstrapping?
>
>      Ferdinando Ametrano and Marco Bianchetti mentioned in their paper
>
>      Bootstrapping the Illiquidity: Multiple Yield Curves Construction for
>      Market Coherent Forward Rates Estimation
>
>      that they have implemented the algorithms within QuantLib framework.
>
>      So just wondering if anyone know any example of how to run this in
>      QuantLib.
>
>      Thanks.
>      --
>      Sincerely yours
>
>      Hengli Zhang
>      MSFM, University Of Chicago
>      [hidden email]
>
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>   --
>   Sincerely yours
>
>   Hengli Zhang
>   MSFM, University Of Chicago
>   [hidden email]
>
>
>
>
> --
> Sincerely yours
>
> Hengli Zhang
> MSFM, University Of Chicago
> [hidden email]
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