DEFINITION of 'LIBORinArrears Swap'
A swap in which the interest paid on a particular date is determined by that date's interest rate rather than the interest rate of the previous payment date. A swap entails the exchange of one security for another in order to change the maturity (in the case of bonds), the quality of issues (bonds or stocks), or in response to changing investment objectives. A LIBORinarrears swap is a type of swap where each payment is based upon the LIBOR at the end of the payment period. This is in contrast to a traditional LIBOR swap where the interest is based on the beginning or the original interest period. Also called inarrears swap, swapinarrears, reset swap, and arrears swap.
BREAKING DOWN 'LIBORinArrears Swap'
LIBOR refers to the London Interbank Offered Rate, and is the interest rate at which banks can borrow funds from other banks in the Eurocurrency market. It is the world's most widely used shortterm interest benchmark. The LIBORinarrears structure was introduced in the mid1980s to enable investors to take advantage of potentially falling interest rates. It is a strategy used by investors and borrowers who are directional on the interest rates and who believe they will fall. Once the rate is defined, the rate is applied retroactively (in "arrears") to that period.

Rate Anticipation Swap
A type of swap in which bonds are exchanged according to their ... 
Swap
A derivative contract through which two parties exchange financial ... 
Substitution Swap
An exchange that is carried out by trading a fixedincome security ... 
Delayed Rate Setting Swap
An exchange of cash flows, one of which is based on a fixed interest ... 
Swap Rate
The rate of the fixed portion of a swap as determined by its ... 
Asset Swap
Similar in structure to a plain vanilla swap, the key difference ...

Trading
How Are Interest Rate Swaps Valued?
When trading in financial markets, higher returns are generally associated with higher risk. Hedge your risk with interest rate swaps. 
Trading
An Introduction To Swaps
Learn how these derivatives work and how companies can benefit from them. 
Managing Wealth
An InDepth Look At The Swap Market
The swap market plays an important role in the global financial marketplace; find out what you need to know about it. 
Investing
What's an Interest Rate Swap?
An interest rate swap is an exchange of future interest receipts. Essentially, one stream of future interest payments is exchanged for another, based on a specified principal amount. 
Investing
How To Read Interest Rate Swap Quotes
Puzzled by interest rate swap quotes terminology? Investopedia explains how to read the interest rate swap quotes 
Trading
Currency Swap Basics
Find out what makes currency swaps unique and slightly more complicated than other types of swaps. 
Trading
Different Types of Swaps
Investopedia explores the most common types of swap contracts. 
Investing
The Advantages Of Bond Swapping
This technique can add diversity to your portfolio and lower your taxes. Find out how. 
Trading
Interest Rate Swaps Explained
Plain interest rate swaps that enable the parties involved to exchange fixed and floating cash flows. 
Investing
The FastPaced World of Libor & Fixed Income Arbitrage
LIBOR is an essential part of implementing the swap spread arbitrage strategy for fixed income arbitrage. Here is a stepbystep explanation of how it works.

Can individual investors profit from interest rate swaps?
Find out how individual investors can speculate on interest rate movements through interest rate swaps by trading fixed rate ... Read Answer >> 
What is an absolute rate?
An absolute rate is easy to understand once you know the basics of an interest rate swap. An absolute rate is the fixed rate ... Read Answer >> 
What are interest rate swaps on the OTC market?
Learn about interest rate swaps and how they are traded over the counter, and understand the impact of DoddFrank on swaps ... Read Answer >> 
How do companies benefit from interest rate and currency swaps?
An interest rate swap involves the exchange of cash flows between two parties based on interest payments for a particular ... Read Answer >> 
Can bond traders trade on interest rate swaps?
Read about interest rate swaps and why these transactions are performed by institutional actors in the bond market, not individual ... Read Answer >> 
Do interest rate swaps trade on the open market?
Learn how interest rate swaps are traded on the OTC and interbank markets, and how these swaps can be used to arbitrage different ... Read Answer >>