Swap rate

From MarketsWiki
Jump to: navigation, search
ICE wiki logo.jpg

In the case of an interest rate swap, the swap rate is the market interest rate paid by the party responsible for the fixed payments. In general, a well-defined market rate exists for this payment, and when a swap is initiated, the fixed rate paid is usually quite close to the market swap rate. However, as the swap matures the fixed rate paid on the swap stays constant, while the swap rate might change, and these two rates can diverge.[1]

References

  1. swap rate definition. Investorwords.