interest rate swap

(redirected from Forward starting swaps)

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 ?
Specific hedging strategies include treasury rate locks, forward starting swaps, and interest rate caps and floors.
The company will use the funds to repay its senior revolving credit, settle certain forward starting swaps contracts, make payments on the sale-leaseback agreement related to its refractory ore treatment plant in Nevada and for general corporate purposes such as exploration and development-related funding and capital returns to stockholders.
The firm aims to use the funds from the offering for repayment of the outstanding balance under the Company's senior revolving credit facility, settlement of certain forward starting swaps contracts, remaining payments to be made during 2012 in connection with the exercise of the early purchase option under the sale-leaseback agreement relating to the Company's refractory ore treatment plant in Nevada, and for general corporate purposes.
As a result, COPT has discontinued hedge accounting on the 10-year forward starting swaps and is reclassifying $28.
A key component of the original debt structure plan included nearly $1 billion of debt to be sold with the commitment of insured bonds and forward starting swaps.
The airport has indicated that it plans to issue bonds in 2011 to refund its outstanding $171 million in series 2001A bonds, potentially reducing debt service obligations from 2012 onwards through the synthetically lower interest rates associated with the forward starting swaps.
Currently, the airport remains committed to $975 million of new long-term debt to be issued by 2011 in conjunction with the commitment of forward starting swaps.
The airport is committed to $975 million of long-term debt to be issued by 2011 given the prior execution of forward starting swaps, of which the termination values under current market conditions exceed $200 million.
In addition, to meet the growing demand for different, more complex structures of interest rate swaps, Interactive Data now delivers independent valuations of forward starting swaps.
The series 2006 bonds have been swapped to a fixed rate through the use of four forward starting swaps with Bear Stearns Capital Markets Inc.
The 2005 series Q bonds, due March 1, 2008-2031, relate to the fourth tranche of the 2003 forward starting swaps.
Fitch also notes Scripps Health (Scripps) has entered into six floating- to fixed-rate forward starting swaps related to the series 2005A-F bonds aggregating $226 million with Citibank, N.

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