An interest rate swap that is based on the structure of TIPS securities. This swap pays a periodic fixed rate on an accreting notional amount plus an additional one-time payment on maturity date. The payout structure is identical to that of many index-linked bonds. TIPS swaps are commonly held by long-term investors such as hedge funds, preferring the additional flexibility associated with the index-linked swaps compared to cash index-linked bonds.
January 31, 2024
