Practical Law Glossary Item 8-386-4133 (Approx. 4 pages)

Glossary

Interest Rate Swap

A type of swap under which one party, typically called the fixed rate payer, pays a fee (usually quarterly) to the other party, usually called the floating rate payer, which pays to the fixed rate payer a variable amount that is usually the bed on the product of SOFR or another benchmark rate and the transaction's notional amount. The fixed rate is typically the product of a fixed number of basis points and the swap's notional amount.