DEFINITION of 'Amortizing Swap'
An exchange of cash flows, one of which pays a fixed rate of interest and one of which pays a floating rate of interest, and both of which are based on a notional principal amount that decreases. In an amortizing swap, the notional principal decreases periodically because it is tied to an underlying financial instrument with a declining (amortizing) principal balance, such as a mortgage.
BREAKING DOWN 'Amortizing Swap'
The notional principal in an amortizing swap may decline at the same rate as the underlying or at a different rate which is based on the market interest rate of a benchmark like mortgage interest rates or the London Interbank Offered Rate. The opposite of an amortizing swap is an accreting principal swap  its notional principal increases over the life of the swap. In most swaps, the amount of notional principal remains the same over the life of the swap.

Index Amortizing Swap  IAS
An interest rate swap where the notional principal amount declines ... 
Accreting Principal Swap
A derivative where counterparties exchange financial instrument ... 
Notional Principal Amount
In an interest rate swap, the predetermined dollar amounts on ... 
Fixed Price
The leg of a swap that is based on an unchanging interest rate. ... 
Floating Price
The leg of a swap that is based on a fluctuating interest rate. ... 
Swap
A derivative contract through which two parties exchange financial ...

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