Banking
Prompt Corrective Action
June 3, 2021
Derivatives
Actual/Actual
June 3, 2021

A swap agreement that is made between a municipality (a city or town local council) and a financial intermediary, in which the former assumes the role of the fixed rate payer and the latter is the floating rate payer. However, the floating rate is (and must be) exactly equal to a floating rate liability on a municipal debt.

The actual rate swap is also called a perfect swap, a zero basis risk swap, or a zebra swap.

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