Floating-rate payer

Floating-rate payer

In an interest rate swap, the counterparty who pays a rate based on a reference rate, usually in exchange for a fixed-rate payment.

Floating-Rate Payer

In a plain vanilla swap, the investor who pays the floating interest rate and receives the fixed interest rate. The two legs of a plain vanilla 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. The floating rate payer gives LIBOR + 0.5% of the notional value to the fixed rate payer and, in return, receives 3.5% of the same notional value. Each party pays the other at set intervals over the life of the swap.
References in periodicals archive ?
On each of the payment dates, t, the contract calls for the fixed-rate payer to pay the notional principal multiplied by a fixed proportion (1 + [pi]) H(t) to the floating-rate payer and to receive in return the notional principal multiplied by S(t).
The rating addresses the likelihood that the floating-rate payer will have to make a protection payment under the terms of the respective CDS.
The ratings address the likelihood that the floating-rate payer will have to make a protection payment under the terms of the credit default swap.