swaps - why?


S

SIB-er

I have swaps with rate refixing. Basically it's like deposit placed and
taken without principal settlement. Only interest earned/spent is settled on
some fixed dates (rate is floating and determined by bilateral agreement).

I look at some old gap reports, which list principal as settled on last rate
refix date - together with last interest payment. Nobody can explain why
principal is listed. Maybe because company is too big :))

Can anybody tell me what could be the reason? I would expect to see
principal if at all on maturity date. With those swaps it is not settled
anyway. Otherwise I'd expect just interest on swap. But no - every next rate
refixing date both interest and principal are shown. Is such approach making
life easier for some accountants? Or why at all?

Could it be that swap can be cancelled on rate refixing date? Never heard
about that but who knows?

Alx
 
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J

J

Unless a fancy banking IT system is used, it is likely that the swap
transaction was recorded as a lending/ borrowing hence the principal shows
up..

or the staff preparing the gap report was inadequately trained :eek:)
 
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S

SIB-er

J, thanks for opinion

But I am more interested in "inadequately" point.
What would be the adequate approach?

A.
 

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