Glossary of Municipal Securities Terms


An agreement whereby an issuer synthetically converts fixed rate debt into variable rate debt through an interest rate swap or similar arrangement. In this process, the issuer makes payments to the counterparty at a variable rate determined according to the terms of the swap while the counterparty pays a fixed rate also according to the terms of the swap, which may be equivalent to the rate due to bondholders as determined under the bond contract. See: INTEREST RATE SWAP CONTRACT. Compare: FLOATING-TO-FIXED RATE SWAP.

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