Asset Swap

An asset swap is the combination of a defaultable bond with a fixed for floating interest rate swap.
The fixed bond coupon is swapped for a floating rate based on LIBOR plus a spread
An asset swap enables an investor to buy a fixed rate bond and then hedge out the interest rate risk by swapping the fixed payments to floating.

This type of swap is a flow of payments from the asset for a different set of cash flows
An asset swap enables the investor to buy a fixed rate bond and then hedge out the interest rate risk by swapping the fixed payments for floating.
The investor keeps the credit risk

Asset Swap Spread

Par Asset Swap

The buyer purchases a bond for the full par price
The maturity of the swap is the same as the maturity of the asset

Market Asset Swap

Cross-Currency Asset Swap