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Low Coupon Swap
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Low Coupon Swap
An
interest rate swap
agreement with fixed rate payments below current market rates. The floating rate
counterparty
usually receives a front-end or back-end fee to compensate for the swap's positive net
present value
to the
fixed rate payer
. Low coupon swaps may be tax motivated. Also called
Non-Par Swap
. Compare with
Discount Swap
. See
Off-Market Coupon Swap
.
Glossary
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