Interest Rates Swaps

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What are Interest Rates Swaps?
An Interest Rate Swap is an agreement between two counterparties to exchange interest payments in a single currency for a stated time period. Only interest payments are exchanged, not principal.
 
Terms of the swap include starting and ending dates, settlement frequency, the notional amount (principal) on which swap payments are based, and reference rates such as LIBOR or benchmark Treasuries on which swap payments are determined.

Interest Rate Swaps can be applied to a wide range of hedging needs and can be tailored to meet the user’s specific risk management objectives.
Interest Rate Swaps can be applied to a wide range of hedging needs.
An Interest Rate Swap is an agreement between two counterparties to exchange interest payments in a single currency for a stated time period.
Example
In this example, client XYZ has effectively converted a floating rate liability of 3mL +200 bp to a Fixed rate liability of 3.95% thus locking in current levels of interest rates.
Benefits of an Interest Rate Swap
Protection against adverse movements in rates not only stabilizes cash flows and reduces uncertainty but also allows companies to focus less on financing and more on running their business.

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