Exhibit B - Glossary of Terms
Confirmation - A contractual document executed for a specific Swap transaction which details the specific terms and conditions applicable to that transaction (fixed rate, floating rate index, payment dates, calculation methodology, amortization, maturity date, etc.).
Counterparty - A principal party to a Swap, as opposed to an agent such as a broker. Â̾ÞÈËÊÓƵ and a Swap dealer would both be counterparties in a transaction.
Credit Support Annex - A contractual document that covers the posting of collateral, if required under the ISDA Schedule, which is based on the net mark–to–market values of the cash flows in the Swap.
Forward Starting Swap - An interest rate Swap in which the Swap terms are set at the outset, but the start of the cash flow accruals and exchanges is delayed until some future date.
Hedge - A position taken in order to offset the risk associated with some other position. For example, a floating-to-fixed rate Swap can be a hedge of the interest rate risk of variable rate debt.
Interest Rate Swap - An interest rate Swap is a contract between two parties to exchange cash flows over a predetermined length of time. Cash flows are calculated periodically based on a fixed or variable interest rate against a set "notional" amount (amount used only for calculation of interest payments). Principal is not exchanged.
ISDA - The International Swaps and Derivatives Association, Inc. The global trade association whose members are dealers in the Swap industry. Most Swap transactions are executed under standard documentation created by ISDA.
ISDA Master Agreement - The primary document for the terms and conditions governing the Swap market. The ISDA Master Agreement contains the terms for events of default, termination events, representations and covenants, early termination provisions and payment calculations.
LIBOR - The London InterBank Offered Rate. The rate at which banks will lend eurodollars to each other. The most active dollar-based taxable interest rate benchmark utilized globally.
Maximum Net Termination Exposure - An amount equal to the aggregate termination payment for all existing and projected Swap transactions that would be paid by an individual counterparty. For purposes of this calculation, the aggregate termination payment is equal to: (i) the reasonably expected worst-case termination payment under all existing Swaps prior to the execution of any proposed transaction, plus (ii) the reasonably expected worst-case termination payment of the proposed transaction.
Notional Amount - The stipulated principal amount for a Swap transaction. There is no transfer of principal for a Swap, but there is an exchange in the cash flows for related, designated interest payments.
Schedule to the ISDA Master Agreement - A contractual document that supplements and may modify the terms of the Master Agreement. It also specifies which of a number of particular options available under the Master Agreement the parties have chosen to apply. The terms of the Schedule become part of the Master Agreement and will govern all Swap transactions consummated under the Master Agreement unless the Confirmation for a particular Swap transaction provides otherwise with respect to that Swap.
SIFMA Index - The Securities Industry and Financial Markets Association Municipal Swap Index. The principal benchmark for short-term, tax-exempt rates. A market basket index of over 400 actively traded, highly rated, non–AMT tax–exempt variable rate issues that reset their rates every Wednesday.
Swaption - A Swaption is an option on a Swap. The Swaption purchaser has the right to enter a specific Swap for a defined period of time. This option can be exercised on a specific exercise date or on any of a series of exercise dates depending on the specific terms of the Swaption.
Yield Curve - Refers to the graphical or tabular representation of interest rates across different maturities. It reflects the market's views about implied inflation/deflation, liquidity, economic and financial activity, and other market forces.
The official version of this information will only be maintained in an on-line web format. Any and all printed copies of this material are dated as of the print date. Please make certain to review the material on-line prior to placing reliance on a dated printed version.
