MARKETS GLOSSARY
Swap
Interest Rate Swap
A contract exchanging one stream of interest payments for another.
What does Swap mean?
A contract exchanging one stream of interest payments for another. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Swap in context
A borrower may swap floating payments for fixed payments under agreed terms.
Why it matters in financing
Swap can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related markets terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.