Bond Swap

A strategy in which an investor sells a bond and at the same time purchases a different bond with the proceeds from the sale.

Investopedia Says:
There are several reasons why people use a bond swap: to seek tax benefits, to change investment objectives, to upgrade a portfolio's credit quality or to speculate on the performance of a particular bond.

Related Links:
Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration. Advanced Bond Concepts
Investing in bonds - What are they, and do they belong in your portfolio? Bond Basics Tutorial
Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy. Corporate Bonds: An Introduction To Credit Risk

Selling a bond prior to its maturity and purchasing another. Bond swapping is a popular portfolio management technique. There are several types of swaps: A maturity swap exchanges bonds of different maturities, such as long-term bonds for bonds of shorter maturities; a quality swap upgrades safety by purchasing high-grade bonds; a yield swap aims to maximize return on invested capital by, say, purchasing deep discount bonds when rates are falling; and a tax swap creates a tax loss offsetting capital gains earned by a substitute bond while preserving the original investment. See also Asset Swap; Currency Swap; Interest Rate Swap; Wash Sale.