That doesn't really follow, because contrary to what you say there is option c) buy ten year note futures. From a transaction cost perspective, that's not too

That doesn't really follow, because contrary to what you say there is option c) buy ten year note futures. From a transaction cost perspective, that's not too bad, and your argument certainly doesn't in itself explain this move. (You could also buy fives and bonds if the butterfly is appealing). The pricing of a swap didn't first order really reflect credit risk of the swap itself (that effect is small versus what we are discussing here). Because swaps between dealers have long been collateralised with mutual mark to market. It did reflect the fact that LIBOR is rate for an unsecured loan between banks. Possibly the new regime caps how high that might go, but it's really less about LIBOR and more about Treasury funding. Capital requirements and the higher cost of balance sheet as reflected in the repo market must be a starting point. And that's not just a US thing, but is at work in other markets too.