A bond swap that involves swapping a relatively high-price bond with a relatively low-price bond (otherwise, the two bonds are identical). It aims to increase yield by establishing a difference in yield to maturity (YTM) between two bonds. The difference also takes into consideration an adjustment reflecting interim reinvestment of coupons at a given rate of return between the time of swap and maturity date.

In other words, the swap constitutes a long position in an underpriced bond (higher yield bond) and a short position in an overpriced bond (lower yield bond), then closing the positions when the prices of the two bonds get equal.

This swap is also known as a pure yield pickup swap.