What is Bond exchange?

Swap bonds is a situation where bond holders decide to sell one or more currently held bonds and buy other bonds that are considered the same or similar market value. The purchase and sale takes place at about the same time, effectively replacing or replacing one bond or set of bonds for new ones.

There are several reasons why the investor can decide to engage in bond exchange. One of the more common motivations for involvement in bonds is to sell a bond at the end of the calendar year. Often it is a bond that performs under anticipation and can even be sold with a loss. The sale creates a tax depreciation and provides revenue for the purchase of another bond of similar value, which in the near future shows a promise of strong performance.

This practice of interpreting a bond that does not work well for one of the similar value, which is expected to obtain the Profit of Portfolio Stable. Bond sales also create depreciation for taxes, which maybe convenient. As a final advantage, the purchase of bonds that completes the task of the swap of bonds has a result of obtaining an asset for which it is expected to appreciate value, which determines the phase for the upcoming profit year.

Bond exchange is also an effective means of expanding or shortening the maturity of bonds in the investment portfolio. Depending on the goals and strategies that the investor has in mind, it can make it possible to sell bonds with short -term maturity with the same number of bonds with a longer -term date. As a tool to customize the portfolio components to achieve specific revenues in a given set of circumstances, Swap bonds are easy to achieve.

Bond swaps are also used to exchange bonds in portfolio for other bonds with the difference in NT. The investor may decide to sell a bond with higher rating and use income to buy a bond with a lower rating, again as ProsTedek to place the asset of the portfolio to comply with the investment strategy.