What is Asset Swap?

Legal Definition
In financial accounting, an asset swap is an exchange of tangible assets for intangible assets or vice versa. Since it is a swap of assets, the procedure takes place on the active side of the balance sheet and has no impact on the latter in regard to volume. As an example, a company may sell equity and receive the value in cash, thus increasing liquidity.

A company often utilizes this method when in need for money to invest (internal financing) or to pay off debts.

In finance, the term asset swap has a particular meaning. When one refers to an asset swap, one has in mind the exchange of the flow of payments from a given security (the asset) for a different set of cash flows. An example of this is where an institution swaps the cash flows on a U.S. Government Bond for LIBOR minus a spread (say 20 basis points). Such swaps usually have stub periods in order to bring the chronology of the cash flows into line with that of the underlying bond.
-- Wikipedia
Legal Definition
Exchanging one type of an asset for another to get better asset liability matching.