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IAS


It stands for indexed annuity swap; a CPI-linked swap where the floating leg is indexed to a consumer price index (CPI) and the fixed leg is linked to a fixed stream of cash flows (annuity payment). The counterparties exchange annual payments escalating at a fixed escalation rate against an inflation index.

IAS is an acronym for indexed annuity swap; an amortizing swap (specifically, an interest rate swap) whereby the notional principal is amortized or decreased based on the movement of an underlying index-based reference rate, i.e., a short-term money market rate, such as LIBOR.

IAS may also stand for index accreting swap; an accreting swap in which the notional principal increases as the benchmark interest rate index moves down. This swap is typically made up of a standard swap and a set of embedded interest rate options. It entails the receipt of a fixed rate, normally lower than that in a vanilla swap, against the payment of a floating rate. In other words, the buyer is said to be purchasing options to enter into swaps in higher principal amounts as interest rates fall.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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