Swap Spread

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DEFINITION of 'Swap Spread'

1. The difference between the negotiated and fixed rate of a swap. The spread is determined by characteristics of market supply and creditor worthiness.

2. The difference between the swap rate and the lending rate offered through other investment vehicles with comparable characteristics.

INVESTOPEDIA EXPLAINS 'Swap Spread'

Similar to equity spreads, the swap spread adjusts for every contract and the different participating parties.

RELATED TERMS
  1. Spread

    1. The difference between the bid and the ask price of a security ...
  2. Swap Dealer

    An individual who acts as the counterparty in a swap agreement ...
  3. Quality Spread Differential - QSD

    In an interest rate swap, the difference between the interest ...
  4. Swap

    Traditionally, the exchange of one security for another to change ...
  5. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  6. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
RELATED FAQS
  1. How is spread calculated when trading in the forex market?

    First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms ... Read Full Answer >>
  2. What are interest rate swaps on the OTC market?

    Interest rate swaps are agreements where counter parties agree to exchange interest rate cash flows based upon the difference ... Read Full Answer >>
  3. How can I profit from a decline in the drugs sector?

    Profit from a decline in the drugs sector by short selling or by purchasing futures contracts or put options. Investors use ... Read Full Answer >>
  4. What are the Securities and Exchange Commission regulations regarding swaps?

    The U.S. Securities and Exchange Commission (SEC) was granted the authority to regulate security-based swaps (SBS) by Title ... Read Full Answer >>
  5. What would motivate an entity to enter into a swap agreement?

    The main purpose of swap agreements is to swap cash flows between counterparties for a certain market or asset. Generally, ... Read Full Answer >>
  6. What other options does an investor have to buying physical silver?

    A wide variety of investment options are available to traders wishing to invest in the silver market. Buying physical silver ... Read Full Answer >>
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