medium · Debt Capital Markets pricing-yields-curve
In an 'Asset Swap', what is the investor primarily doing?
- Exchanging the fixed coupons of a bond for a floating rate (e.g., SOFR) plus a spread.
- Swapping the bond's principal for newly issued equity in the same issuer.
- Trading a bond with a five-year final maturity for a longer ten-year maturity.
- Exchanging a poorly performing corporate bond for a higher-rated sovereign government bond.
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