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Semi-fixed swap
       
 
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Semi-fixed swap

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Semi-fixed swap
An Interest rate Swap with two possible fixed rates, which can be tailored to suit bullish or bearish market views. The rate paid by the fixed-rate payer depends on whether current Libor (or another reference rate or asset) is above or below a predetermined level. In a typical structure, if Libor is below the Trigger level, the lower of the two rates is paid, if it is above, the higher is paid. These swaps can be used to create asymmetric Risk exposures, ie, cheaper fixed-rate funding for an oil producer when oil prices are Low, or an enhanced Yield for an insurance company when Equity prices are falling.
Posted by  Privatebanking.com
 
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