Asset Swap

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DEFINITION of 'Asset Swap'

Similar in structure to a plain vanilla swap, the key difference is the underlying of the swap contract. Rather than regular fixed and floating loan interest rates being swapped, fixed and floating investments are being exchanged.

INVESTOPEDIA EXPLAINS 'Asset Swap'

In a plain vanilla swap, a fixed libor is swapped for a floating libor. In an asset swap, a fixed investment such as a bond with guaranteed coupon payments is being swapped for a floating investment such as an index.

RELATED TERMS
  1. LIBOR

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  4. Coupon Bond

    A debt obligation with coupons attached that represent semiannual ...
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    A financial instrument that gives the holder the right, but not ...
  6. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
RELATED FAQS
  1. How do companies benefit from interest rate and currency swaps?

    An interest rate swap involves the exchange of cash flows between two parties based on interest payments for a particular ...
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