interest rate swap


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Related to interest rate swap: Currency 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 ?
Eurex Clearings offer to accelerate the development of a liquid, EU based alternative for the clearing of interest rate swaps gains broad market support.
3bn in tax in relation to the tax verdicts made public on 16 December 2015 and the termination of old interest rate swaps for a cash amount of SEK282m, Kungsleden will have cash and unutilized credit facilities of SEK1.
5) If LC Inc issues a fixed rate bonds and engages in the interest rate swap, what is the net cost of financing for LC Inc.
Yankson argues that in an interest rate swap both parties are sharing the risk and a case can be made for allowing interest rate swaps to be Shari'ah compliant without resorting to buying and selling commodities.
The execution of an interest rate swap or similar product typically does not affect the nature of an issuer's obligation or its legal liability to bondholders on any related bond issue.
Simply stated, interest rate swaps are an exchange of interest-rate payments between two parties without an exchange of the underlying debt.
futures exchange that offers Interest Rate Swap Futures.
According to CME, the product has the same economic exposure as an interest rate swap with the margin and liquidity benefits of a futures contract, and at expiration all open positions will deliver into a CME Cleared Euro Interest Rate Swap.
Focusing more on the needs of our clients, we have developed a crossbreed of trading platform that helped us strengthen our transparency and competence in the Euro Interest Rate Swap markets.
Under the agreement, Sapient Global Markets will provide client training, program management and technology expertise including integration of clearing and trading systems as well as support for other technology solutions, to help firms take advantage of the Eris Exchange Interest Rate Swap Futures market.
BANKING AND CREDIT NEWS-December 2, 2013-Javelin SEF Streamlines interest rate swap MAT submission
For example, a so-called leveraged interest rate swap may require interest payments that are- a multiple of changes in a specified market rate-sharply exposing an entity to potential losses disproportionate to interest rate changes.

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