Overview of swap transactions

Swap transaction refers to the exchange of debts in the same currency with debts in different currencies through financial intermediaries. Swap transactions can be divided into five types: interest rate swap, currency swap, commodity swap, equity swap and credit swap.

Interest rate swap means that both parties agree to exchange cash flows in the same nominal principal of the same currency in a certain period of time in the future.

Currency swap refers to the exchange of the principal and fixed interest of one currency with the equivalent principal and fixed interest of another currency.

Commodity exchange is a special type of financial transaction. In order to manage commodity price risks, both parties agree to exchange cash flows related to commodity prices.

Equity replacement refers to the transfer of all or part of the equity in the process of enterprise acquisition or merger, usually the acquirer issues new shares in exchange for the equity of the acquired company.

Credit swap refers to a transaction in which a company's parent company issues loans to its subsidiaries through foreign banks.