Interest rate swap

An interest rate swap is a transaction wherein one party pays (on a one-time basis or in instalments) floating amounts in a specified currency calculated using an established floating interest rate from a notional amount in such currency and the other party pays (on a one-time basis or in instalments) fixed amounts in the same currency calculated using a fixed interest rate in relation to the same notional amount.

This product serves as a tool to hedge interest rates on a long-term basis. Only the interest payments are exchanged, not the notional amounts.

Product features

  • In the case of an interest rate float, it enables hedging against the expected increase in interest rates.
  • Zero costs connected with the deal.
  • Flexibility of parameters - easily adjustable to the structure of the underlying asset (loan)
  • Can be sold at any time.

Product variants

  • Amortising interest rate swap - the notional amount of the swap declines over time in a predefined manner.
  • Step-up swap - the notional amount of the swap increases over time in a predefined manner.
  • Roller Coaster swap - the notional amount of the swap declines as well as increases over time in a predefined manner.
  • A combination with interest rate options or binary interest rate options tailored to suit your expectations depending on the actual market conditions.