Snowballs

This Issue in United States

Snowballs

Concept of Snowballs in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A structured interest rate derivative (i.e. an instrument that transfers risk from one party to the other) transaction where for an initial term the coupon is specified. Thereafter each coupon is defined in terms of the previous coupon. There is a guaranteed high initial coupon, but coupon payments thereafter are determined by the speed with which the floating rate rises or falls. Snowballs are typically callable.

Resources

See Also

• Derivatives Contract