Interest rate swap: Difference between revisions
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* [[Accreting swap]] | * [[Accreting swap]] | ||
* [[Amortising swap]] | * [[Amortising swap]] | ||
* [[Basis swap]] | |||
* [[Cross-currency interest rate swap]] | * [[Cross-currency interest rate swap]] | ||
* [[Foreign exchange swap]] | * [[Foreign exchange swap]] | ||
Revision as of 18:54, 29 August 2016
(IRS).
A longer-term interest rate derivative.
An IRS is similar in its effects on interest expense or interest income to a Forward Rate Agreement (FRA).
An IRS - like an FRA - is a contract for differences based on an agreed market interest rate.
But the IRS usually has multiple future interest calculation and settlement dates, and is used by a corporate to hedge or transform longer term interest rate exposures.
For example, an interest rate swap might be used to transform a longer term floating rate borrowing into a synthetic fixed rate borrowing.
(Whereas an FRA is for the shorter term and for a single settlement receipt or payment.)
Other forms of capital market swap have been developed for the exchange of many other different types of cash flows and are used widely to hedge or transform a wide variety of related underlying exposures.
See also
- Accreting swap
- Amortising swap
- Basis swap
- Cross-currency interest rate swap
- Foreign exchange swap
- Forward rate agreement
- Forward start swap
- Notional amount
- Swap
- Swap rate
Other links
Treasury Essentials: interest rate swap, Will Spinney, March 2014
