interest rate swap

(redirected from Fixed Interest Rate Swap)

Interest rate swap

A binding agreement between counterparties to exchange periodic interest payments on some predetermined dollar principal, which is called the notional principal amount. For example, one party will pay fixed and receive variable.

Interest Rate Swap

The exchange of interest rates for the mutual benefit of the exchangers. The exchangers take advantage of interest rates that are only available, for whatever reason, to the other exchanger by swapping them. The two legs of the swap are a fixed interest rate, say 3.5%, and a floating interest rate, say LIBOR + 0.5%. In such a swap, the only things traded are the two interest rates, which are calculated over a notional value. Each party pays the other at set intervals over the life of the swap. For example, one party may agree to pay the other a 3.5% interest rate calculated over a notional value of $1 million, while the second party may agree to pay LIBOR + 0.5% over the same notional value. It is important to note that the notional amount is arbitrary and is not actually traded. This is also called a plain vanilla swap.

interest rate swap

See swap.

interest rate swap

see SWAP.
References in periodicals archive ?
The proposal addresses two concerns of private company stakeholders--that hedge accounting requirements are too complex and that the costs and relevance of fair value accounting of a receive-variable, pay fixed interest rate swap are questionable.
The district will retain for the series 2008B bonds the floating to fixed interest rate swap it executed in conjunction with the series 2007A bonds to continue the synthetic fixed rate nature of those bonds.
announced today that it has entered into fixed interest rate swap agreements with various counterparties, the impact of which will effectively fix future interest payments on $200 million of the Company's current $270 million floating rate term loan debt obligations.
0 million notional amount floating to fixed interest rate swap arrangements relating to a portion of its $425.
0 billion reduction in the net receive fixed interest rate swap position.
As part of the repositioning, United prepaid a $50 million variable interest rate Federal Home Loan Bank ("FHLB") advance and terminated a fixed interest rate swap associated with this advance during the first quarter of 2006.
A combination of interest rate caps and a fixed interest rate swap have been put in place to hedge $120 million from late May 1995 through late May 1996.
Memorial expects to enter into a floating to fixed interest rate swap with a notional amount of $38.
In addition, PWH entered into a floating to fixed interest rate swap with a notional amount of $10 million in conjunction with the loan.
PRC has entered into a forward starting floating to fixed interest rate swap with a notional amount of $33.
The company expects to record charges associated with the termination of the floating to fixed interest rate swaps and the write-off of deferred financing costs of approximately $19 million in the first quarter 2005.
In conjunction with the pay down of its Tranche B Term Loan, the company will terminate $200 million notional of floating to fixed interest rate swaps and reflect a pretax loss of approximately $12 million in its 2003 results associated with the termination of the floating to fixed interest rate swaps.