Substitution Swap
2020-07-30 14:33
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A swap that is carried out by trading a fixed-income security for a higher yielding bond with similar features.
|||The two securities being swapped have similar coupon rates, maturity dates, call features, credit quality, etc.
Investors will most often participate in substitution swaps when they believe there is a temporary discrepancy in bond prices due to market disequilibrium.
