Interest rate agreement

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Interest rate agreement

An over the counter agreement whereby one party, for an up-front premium, agrees to compensate the other at specific time periods if a designated interest rate (the reference rate) is different from a predetermined level (the strike rate.) Also called a FRA (pronounced like ‘draw’) or forward rate agreement.

Interest Rate Agreement

A transaction between two investors in which one (Investor A) agrees to compensate another (Investor B) if a certain variable interest rate, known as the reference rate, rises above some agreed-upon strike rate. Investor A makes this compensation at certain periods of time over the life of the agreement each time the reference rate exceeds the strike. In exchange, Investor B gives Investor A a premium or purchase price for the agreement. See also: Interest rate swap.
References in periodicals archive ?
The framework agreement will not include loans in the obligation and debenture market and interest rate agreements.
Called swaptions for short, these interest rate agreements are usually designed to cushion debt payments in case interest rates rise.
Mark-to-market adjustments are a result of changes (non-cash) in the fair value of interest rate agreements.
GAAP earnings also include valuation adjustments for certain of our assets and interest rate agreements - we exclude them from core earnings.
Other income (expense) was unfavorable in the quarter-to-quarter comparison but remains lower for the first half mainly as a result of fluctuations in the mark-to-market of interest rate agreements.
The framework agreement will not include loans in the obligation and certificate market and interest rate agreements.
Additionally, other income (expense) was lower for the quarter as a result of reduced interest rates and a gain from the mark-to-market of interest rate agreements in 2009 versus a loss recognized in 2008.
Treasury securities 0 0 33,485 Interest rate agreements 1,189 2,037 1,627 Cash and cash equivalents 12,539 19,881 40,948 Restricted cash 2,445 5,384 11,182 Investments in and loans to Holdings(a) 4,795 10,363 26,481 Receivables and other assets 18,240 14,858 18,371 Total assets $ 2,427,603 $ 2,419,928 $ 2,456,974 Short-term debt $ 922,405 $ 1,253,565 $ 1,033,643 Long-term debt 1,282,756 945,270 1,171,141 Payables and other liabilities 12,742 11,158 7,991 Preferred stockholders' equity 26,517 26,517 26,736 Common stockholders' equity 183,183 183,418 217,463 Total liabilities and stockholders' equity $ 2,427,603 $ 2,419,928 $ 2,456,974 Common shares outstanding at end of period 8,789,377 8,783,341 10,186,317 Reported book value per common share $ 20.
Other income (expense) is favorably lower for the quarter and year-to-date compared to last year because of our lower debt levels and borrowing rates, in addition to favorable mark-to-market adjustments on our interest rate agreements.
Treasury securities - 48,009 - Interest rate agreements 2,037 2,517 2,100 Cash and cash equivalents 19,881 55,627 24,892 Restricted cash 5,384 12,857 24,657 Receivables and other assets 25,221 42,575 25,926 Total assets $2,419,928 $2,832,448 $3,444,197 Short-term debt $1,253,565 $1,257,570 $1,914,525 Long-term debt 945,270 1,305,560 1,172,801 Payables and other liabilities 11,158 14,528 22,334 Preferred stockholders' equity 26,517 26,736 26,736 Common stockholders' equity 183,418 228,054 307,801 Total liabilities and stockholders' equity $2,419,928 $2,832,448 $3,444,197 Common shares outstanding at end of period 8,783,341 11,251,556 14,284,657 Reported book value per common share $20.
As a result of accounting methodologies adopted in the third quarter of 1998, Redwood includes in its earnings the effect of mark-to-market changes for those mortgage securities for which Redwood relies on market valuations to secure short-term financing and for all interest rate agreements.