CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is a bond swap?

Bond swap

It is a financial transaction in which an investor sells holdings of one bond and immediately reinvests the proceeds in another bond. There are a number of reasons, such as improving the quality of their portfolio and for tax planning purposes, for someone to undertake a bond swap.

Where have you heard about bond swaps?

Your financial adviser may suggest a bond swap, as may your accountant in the event that a swap could improve your tax position. Specialist investment publications will reference bond swaps from time to time, and they will feature in how-to investment guides.

What you need to know about bond swaps.

A bond swap is the near-instantaneous sale of one type of bond and the purchase of another using the sale proceeds. It may be undertaken for a number of reasons, such as taking advantage of a change in interest rates or bonds being highly sensitive to shifts in borrowing costs. There also may be a tax rationale for moving from one type of bond to another. Last but not least, a bond swap may be undertaken to improve the quality of a portfolio and the expected return for the investor.

Find out more about bond swaps.

To learn more about bonds, see our definition of a bond prospectus.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading