Zero Basis Risk Swap


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Zero Basis Risk Swap

An interest rate swap between a municipality and a financial institution. The municipality is the fixed rate payer and the financial institution is the floating rate payer. The floating rate the financial institution pays (and that the municipality receives) is identical to the adjustable interest rate on a floating rate note that the municipality previously issued. A ZEBRA makes a municipality's borrowing costs more predictable and therefore reduces its risk.