A quirky bond trade is a back door to cut borrowing costs
Companies issue bonds with the option to buy them back after one year, if interest rates drop, and they enter into an interest-rate swap with a bank, which the bank can cancel after one year. Both are interest-rate options, but that option is more expensive in the derivatives market than in the bond market. The benefit are lower coupons of such bonds.

3 March 2023

Bloomberg