Derivatives
Extinguishing Option
April 17, 2022
Derivatives
Expected To Accrue Return On Nominal
April 18, 2022

An interest rate swap whereby the notional principal amount grows over its time to expiration. Such a swap is particularly fitting in a case where a fixed-rate payer has expanding working capital requirements.

The escalating swap has a wide variety of names, including: appreciating swap, construction loan swap, accumulation swap, escalating principal swap, drawdown swap, staged drawdown swap, accreting swap, set-up swap, and accreting principal swap.

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