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 ?
S&P Carry Adjusted Total Return futures will have the SPCATR index as the underlying, which has quarterly reset functionality built into the index calculation that mimics the reset functionality of an equity swap.
UK-based industrial fuel cell power company AFC Energy (AIM: AFC) has closed an equity swap agreement entered into with financier Lanstead Capital LLP in October 2014, the company said.
M2 EQUITYBITES-April 25, 2016-AFC Energy Closes Lanstead Equity Swap Agreement
United States-based Chrysler LLC's (Chrysler) lenders have reached an agreement with the automaker for a debt for equity swap.
2 billion is accepted under debt to equity swap scheme.
Although the use of options or forward contracts clearly would not accomplish this result, (3) a total return equity swap may achieve this objective.
a wholly owned subsidiary through an equity swap on Aug.
1 through an equity swap in a bid to survive intensifying international competition, the two companies said Thursday.
Brazilian carriers Transbrasil and TAM are apparently in negotiations about developing an operational accord for domestic flights, which could later lead to an equity swap.
In an executive equity swap, an officer or director enters into a bilateral agreement, the swap.
The entire package was two years in the making, as sources say it revolved around an equity swap with Morgan Guaranty Trust, the owner of the property.
Following Helpman (1989), we begin by characterizing a debt - equity swap as an exchange of debt for claims on the random output, and illustrate the transfer of resources from debtor to creditors arising from the introduction of such a programme.