At inception, swaps are transacted at zero cost to both parties. A swap with a zero cost is called a par swap, and the value of the fixed rate for which the swap has zero value is dubbed the “par swap rate”. For swaps whose start date is spot (i.e., swaps that come into effect immediately), this rate is simply abbreviated to the swap rate (it is he market interest rate which is used (or referred to) to determine the fixed rate leg of a swap). The par swap rates are those conventionally quoted on trading screens in the financial markets.

A swap that doesn’t start immediately is referred to as a forward start swap, and the corresponding par swap rate is called the forward swap rate. Forward start swaps are less popular than spot start swaps and forward swap rates are not quoted as standard by swap dealers.