Reverse a swap(redirected from Reversing a Swap)
Reverse a swap
Reswap of bonds to gain the advantage of a yield spread or tax loss and restore a bond portfolio to its position before the original swap.
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Reverse a Swap
To engage in a swap in which the legs are the same as a previous swap, but are held by different parties. For example, suppose two counterparties swap bond A and bond B. The party that receives bond A (who is the same party that gave away bond B) may reverse the swap by giving away bond A and receiving bond B back. One usually reverses a swap if there are tax advantages associated with it, or if the new position is not as profitable as previously thought.
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