In relation to a premium swap, it is a compensation that the fixed-rate payer is obliged to pay the other counterparty (in the form of a swap premium) against the off-market rate involved. Furthermore, if the fixed-rate payer decides to prematurely make any payments that would be owed later under the swap contract, an upfront payment should be made at the time to the tune of the present value of all prepaid amounts.
March 26, 2022
