extension swap

Extension swap

Extending maturity through a swap, e.g. selling a 2-year note and buying one with a slightly longer current maturity.

Extension Swap

A swap in which one investor exchanges a bond for another bond with the same or almost the same terms, but with a longer maturity. An investor may do this directly by swapping one bond for another, or indirectly by selling the bond with the shorter maturity and buying the bond with the longer maturity.

extension swap

The exchange of a bond or note for another virtually identical security having a longer maturity.