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Forward spread agreement
A specialized forward rate agreement under which both parties agree on a spread between two floating interest rates (for example, the spread between two LIBOR rates for two different currencies) on a notional loan of some defined amount for a specified period beginning at some future start date.
At the settlement date, the interest rate differential is determined based on the spread between the reference index rates, minus the agreed spread.
Translations
Synonyms and variations
- FSA