equity swap


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Equity swap

A swap in which the cash flows exchanged are based on the total return on some stock market index and an interest rate (either a fixed rate or floating rate). Related: Interest rate swap.

Equity Swap

A swap in which the at least one of the two legs is the cash flow from some equity instrument like a stock. For example, the counterparties to an equity swap may agree to exchange the dividends from two stocks of roughly the same value. Alternatively, they may exchange the capital gains from a stock index for an interest rate calculated over a nominal value. Equity swaps may take a variety of forms, but all exist in order to diversify the cash flows of the parties without requiring them to buy anything new. An equity swap may also help one or both parties legally avoid taxation.

equity swap

An exchange of the potential appreciation of an equity's value and dividends for a guaranteed return plus any decrease in the value of the equity. An equity swap permits an equity holder a guaranteed return but demands the holder give up all rights to appreciation and dividend income.
References in periodicals archive ?
The group has since been talking to its lending banks, understood to include HSBC, Barclays and UBS Warburg, and a small army of bondholders about arranging what will almost certainly be a debt-for equity swap.
The authorization permits management to enter into an equity swap transaction to repurchase up to 1.
The action will come as Nikko Cordial's liquidity is secured on the listing of Citigroup, which is set to wholly own Nikko Cordial through an equity swap, the exchange said.
In fiscal 2005, the company made no interim dividend payment but instead paid 25 yen per share to holders of Daiichi Pharmaceutical and Sankyo shares as money for the equity swap.
Its dip in fortunes was due to major restructuring which has seen a debt for equity swap to split the company two main operations - Anglia Water Services, its regulatory water and sewage operation, and an infrastructure management division.
Marconi's share price has improved significantly in the three months since its debt for equity swap.
Ichigo, which had been dissatisfied with the equity swap ratio for the merger plan, solicited other shareholders' proxies to scuttle the merger plan.
group made investment unions under its control transfer gains on sales of stocks they had received in connection with equity swap deals to Livedoor in the form of dividends, sources familiar with its buyout deals said Thursday.
The lifeline will allow the Woking based group to stay in business while it thrashes out the terms of a debt-for equity swap.
Companies need to decide the ratios of an equity swap after assessing assets and the market value of each firm.
OMX is hedging the OMX Share Program 2006 by using an existing surplus of shares in an equity swap agreement the company entered into with an external party to hedge previous employee stock option programs.
LONDON -- New Medium Enterprises (OTCBB: NMEN) who already had a collaborative agreement with Beijing E-World, a profitable Chinese Electronic and System Technology design company and owned by 14 leading OEM device manufacturers, entered into an agreement to merge its HD technology with E-World's EVD standard by way of an equity swap.