sector swap

sector swap

A bond trading strategy that is used to gain profit by changing yield spreads among different sectors of the bond market. The sectors may be defined by type of industry, public versus private issuer, coupon size, and so forth. With a sector swap, one trades a type of bond currently in favor for a type currently out of favor in the belief that the yield differences are only temporary. The sale of utility bonds and subsequent use of the funds for the purchase of industrial bonds is a sector swap.
References in periodicals archive ?
Despite commendable collaboration among certain donors, the overall reluctance of the donor community to look beyond individual vertical programs, and come together in the development of common strategies and the pooling of resources in HIV/AIDS control programs, in the way that it has been able to do with the recent PRSC and health sector SWAP.
Any residual unintended market or sector risk will be hedged using index derivatives or sector swaps.