korkosopimuksen

Korkosopimus, often translated as an interest rate agreement or swap, is a financial contract between two parties where they agree to exchange interest rate payments. Typically, one party agrees to pay a fixed interest rate on a notional principal amount, while the other party agrees to pay a variable interest rate on the same notional principal. The principal amount itself is not exchanged, hence the term "notional."

These agreements are primarily used for hedging purposes. A company that has borrowed money at a variable interest rate might enter into a korkosopimus to pay a fixed rate, thereby protecting itself from potential increases in interest rates. Conversely, a company with fixed-rate debt might enter into a korkosopimus to pay a variable rate if it anticipates interest rates falling.

Korkosopimukset are a type of derivative contract and are often traded over-the-counter (OTC), meaning they are privately negotiated between parties rather than on a centralized exchange. The terms of the agreement, including the notional principal amount, the fixed interest rate, the variable interest rate benchmark (e.g., Euribor), and the payment dates, are all specified in the contract. The difference between the fixed and variable payments is settled periodically, usually on a quarterly or semi-annual basis.