Airbag Swap

Posted in Finance, Accounting and Economics Terms, Total Reads: 298

Definition: Airbag Swap

Airbag Swap is a variant of interest rate swap in which the notional value changes as per interest rates. The swap is between fixed and floating interest rates depending upon the scenario. It is useful in hedging risk. 

These swaps save in the case of adverse interest rate fluctuations scenarios. Airbag swaps can be done with another company to safeguard both from interest rate changes. 

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