A par asset swap whose underlying asset (e.g. a convertible bond) is repackaged with an equity warrant stripped therefrom, with the holder of the equity warrant portion of the underlying bond (the seller) owning the right to force conversion. The buyer of the swap (usually an investor) expects the option to be exercised by the seller (e.g., a convertible arbitrageur such as hedge funds and specialized structurers). In this sense, the par asset swap’s buyer is said to have written the seller a call option on the bond exercisable any time before maturity or put date of the swap.

The convertible asset swap matures either on the first put date, if any, of the underlying convertible, or on the maturity date of the original convertible bond. The seller can call the asset swap package any time. Hence, the structure usually includes a six-month clawback that allows the buyer of the swap package to receive the spread of at least the minimum equivalent of a six-month period.