CSIMarket


Terms Beginning with B
                       
                       
 Backlog   Basis Point   Billed Business Credit Card  
 Balance of payments   Basis-Only Swap   Bioavailability  
 Balance on current account   Bauxite   Biologic Products  
 Balance on goods and services   Bayer Process   Biomarker  
 Balance Sheet   Bbl   Blast Hole Open Stoping  
 Balloon Angioplasty   Bcf   Blasting  
 Barrel   Bcfe   Blendstocks  
 Basic Cards-In-Force   Beneficial Interest   Blister Copper  
 Basic Net EPS   Beneficiation   Block Cave  
 Basis   Beta   BOE  
                 
                  next arrow
 
 
       
       
 

Basis-Only Swap

Financial Term


Basis-Only Swap in financial industry refers to a type of interest rate swap, where the underlying asset is the difference between the fixed and floating payments received. It is basically a financial contract that allows two parties to exchange streams of interest payments. The structure of this swap is similar to the generic interest rate swap, except that there is no exchange of the notional amount.

In a basis-only swap, one party agrees to pay the other party the floating rate, usually based on an index such as the LIBOR, plus or minus a spread, and the other party agrees to pay a fixed rate for the same term that is equal to the floating rate plus or minus a basis point adjustment. For example, if LIBOR is at 2% and the spread is 20 basis points, then the floating rate would be 2.2% and the other party would be paying the 2.2% to the payer.

Basis-only swaps provide some unique benefits to the financial industry. It allows market participants to take advantage of discrepancies between different financial markets, by exploiting the difference between the yields of two benchmark interest rates. This type of swap is typically used for hedging purposes and risk management.

Additionally, basis-only swaps help in providing liquidity in the financial markets. Basis swaps are useful in order to provide a nuanced view of the market and help market participants find new sources of liquidity according to their asset allocation and risk management strategies. Thus, basis-only swaps are an effective tool to manage interest rate risk and generate additional returns in a diversified portfolio.


   
     

Basis-Only Swap

Financial Term


Basis-Only Swap in financial industry refers to a type of interest rate swap, where the underlying asset is the difference between the fixed and floating payments received. It is basically a financial contract that allows two parties to exchange streams of interest payments. The structure of this swap is similar to the generic interest rate swap, except that there is no exchange of the notional amount.

In a basis-only swap, one party agrees to pay the other party the floating rate, usually based on an index such as the LIBOR, plus or minus a spread, and the other party agrees to pay a fixed rate for the same term that is equal to the floating rate plus or minus a basis point adjustment. For example, if LIBOR is at 2% and the spread is 20 basis points, then the floating rate would be 2.2% and the other party would be paying the 2.2% to the payer.

Basis-only swaps provide some unique benefits to the financial industry. It allows market participants to take advantage of discrepancies between different financial markets, by exploiting the difference between the yields of two benchmark interest rates. This type of swap is typically used for hedging purposes and risk management.

Additionally, basis-only swaps help in providing liquidity in the financial markets. Basis swaps are useful in order to provide a nuanced view of the market and help market participants find new sources of liquidity according to their asset allocation and risk management strategies. Thus, basis-only swaps are an effective tool to manage interest rate risk and generate additional returns in a diversified portfolio.


Related Financial Terms


Help

About us

Advertise