Debt For Bond Swap

AAA

DEFINITION of 'Debt For Bond Swap'

A debt swap involving the exchange of a new bond issue for similar outstanding debt or vice versa. Debt for bond swap transactions are usually executed to take advantage of an interest rate change and/or for tax write-off purposes.

INVESTOPEDIA EXPLAINS 'Debt For Bond Swap'

When interest rates go up a company may decide that it is to their advantage to issue new bonds at a lower face value in order to retire current debt that carries a higher face value; the company can then take the loss as a tax deduction.

RELATED TERMS
  1. Macroeconomic Swap

    A type of derivative designed to help companies whose revenues ...
  2. Formula Method

    A technique for calculating termination payments on a prematurely ...
  3. Bond Swap

    Selling one debt instrument in order to use the proceeds to purchase ...
  4. Swap

    Traditionally, the exchange of one security for another to change ...
  5. Commodity Swap

    A swap in which exchanged cash flows are dependent on the price ...
  6. Basis Rate Swap

    A type of swap in which two parties swap variable interest rates ...
Related Articles
  1. Credit Default Swaps: An Introduction
    Bonds & Fixed Income

    Credit Default Swaps: An Introduction

  2. Corporate Bonds: An Introduction To ...
    Bonds & Fixed Income

    Corporate Bonds: An Introduction To ...

  3. An Introduction To Swaps
    Options & Futures

    An Introduction To Swaps

  4. How Bond Market Pricing Works
    Bonds & Fixed Income

    How Bond Market Pricing Works

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center