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The traditional method of credit spread estimation is based on subtracting independently estimated risk-free and risky term structures of interest rates which in many cases yields unrealistically shaped and often irregular credit spread curves. A parsimonious joint estimation of the risk-free term structure and the credit spread as proposed by Houweling et al. ( 2001 ) might serve as a valuable alternative to overcome this drawback but it is hard to decide whether a seemingly irregular shape ofdoi:10.2139/ssrn.306779 fatcat:pcv3abjqbbcepjcgfprzbqbkpm