interest rate swap

(redirected from Forward starting 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 ?
At the same time, the Company settled its outstanding forward starting swap designated to this debt issuance.
LVL has a forward starting swap with Compass Bank that begins in August 2012.
4% as a result of the forward starting swap entered into July 2011.
In order to minimize interest rate risk related to the long-term funding of the company's development pipeline and upcoming debt maturities, during 2006 and 2007 ESS entered into $355 million of forward starting swap contracts to lock in interest rates.
The second $73 million swap is a forward starting swap with an execution date of 2013 that is valued with a negative mark of $9.
Although Fitch recognizes that the authority has entered into forward starting swap agreements to hedge future borrowing costs, overall uncertainty related to external liquidity renewal remains.
As part of this issue, Morgan Keegan also senior managed a $200 million forward delivery bond issue and served as provider for a $140 million forward starting swap for the refunding bonds.
In addition to the Lehman swaps, Wellmont has entered into a forward starting swap for a notional amount of $150 million with Morgan Stanley Capital Services, Inc.
5 million forward starting swap transaction to partially hedge the ten-year fixed rate financing expected to occur in April 2004.
and one forward starting swap with Morgan Stanley Capital Services Inc.
CNMC has entered into a forward starting swap option to synthetically swap the series 2005 bonds (notional amount of $150 million) from variable to fixed rate.
6 billion notional amount of pay-fixed interest rate swaps, excluding forward starting swaps of $1.

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