DEFINITION
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.INVESTOPEDIA EXPLAINS
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.RELATED TERMS

Reverse Swap
An exchange of cash flow streams that undoes the effects of an existing swap. ... 
Debt For Bond Swap
A debt swap involving the exchange of a new bond issue for similar outstanding ... 
Credit Default Swap  CDS
A swap designed to transfer the credit exposure of fixed income products between ... 
Currency Swap
A swap that involves the exchange of principal and interest in one currency ... 
Forward Swap
A swap agreement created through the synthesis of two swaps differing in duration ... 
Interest Rate Swap
An agreement between two parties (known as counterparties) where one stream ... 
Quanto Swap
A swap with varying combinations of interest rate, currency and equity swap ... 
Total Return Swap
A swap agreement in which one party makes payments based on a set rate, either ... 
Rollercoaster Swap
A seasonal swap providing flexibility of payments at predetermined periods to ... 
Swap
Traditionally, the exchange of one security for another to change the maturity ...
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