What feature does an extendable swap offer?

An extendable swap offers the specific feature of allowing participants to extend the swap period. This means that at predetermined intervals during the life of the swap, a party has the option to extend the duration of the swap agreement, typically based on market conditions or their financial strategy. This flexibility in extending the term can be advantageous for managing interest rate exposure or locking in favorable terms, especially if interest rates are expected to rise or if the swap was initially favorable to one of the parties.

This feature differentiates it from standard swaps, where the terms are typically set for a fixed period with no option to extend. The ability to extend allows for strategic financial planning and adaptation to changing market environments, making it a valuable tool for financial management.