Banking

Prompt Corrective Action

June 3, 2021
Derivatives

Actual/Actual

June 3, 2021

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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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