A swap by which a low-rated issuer can sell its debt under the name of another issuer. A low-rated bank or a small firm tends to have a higher default risk than a high-rated bank or a large firm. Therefore, coupons of low rated issuers will be higher than coupons of high rated issuers. Sometimes, a bank may need to issue a bond or any fixed-income security, but its too-low credit rating doesn’t come to its rescue.

The bond can still be issued, however, under the name of another bank or firm with a sufficient credit rating. This entails swapping the issuers, with the credit spread having to be paid from the lower-rate issuer to the higher-rated issuer. In this case, the entire bond issue of a bank is sold to the ultimate issuer, and the bank then buys it back for distribution.