Cancelling call feature - Swpation

CFA Level III Derivatives
#1

Sch book 4 LOS 31 h, pg 229

The text describes that an issuer can nullify the call feature by selling a payer swaption and this would work in a low interest rate environment.

Now trying to flip the coin: can the holder of the callable bond do something using swaption to nullify the call feature and enjoy the higher.

Can I term the instrument he is looking for as ‘purchasing a receiver swaption’

Any detailed explanation will be highly appreciated.

Thank you

#2

I tought if a company issue a callable bond, it could remove the call feature by selling a receiver swaption.

Now i am confused. Can someone confirm how the issuer of a callable bond can remove the call feature please?

Thank you.

#3

Please ignore my question.

You are right.

My question is not correct

#4

Ok :slight_smile: