6. Gilts, technically, are British and Irish government securities, although the term also includes issues of local British authorities and some overseas public-sector offerings.

7. The London Interbank Offer Rate (LIBOR) is the rate that most international banks charge one another for loans of Eurodollars overnight in the London market. LIBOR is a cornerstone in the pricing of money market issues and other short-term debt issues by both government and corporate borrowers. Interest rates are frequently quoted as some spread over LIBOR, and they then float with the LIBOR rate.

8. There are two basic kinds of swaps: interest rate and currency. An interest rate swap occurs when two parties exchange a floating-rate payment for a fixed-rate payment or vice versa. Currency swaps are agreements to deliver one currency in exchange for another. Often, both types of swaps are used in the same transaction when debt denominated in different currencies is swapped. Chapter 23 contains a more detailed discussion of swaps.


British and Irish government securities.

London Interbank Offer Rate (LIBOR)

The rate most international banks charge one another for overnight Eurodollar loans.


Agreements to exchange two securities or currencies.

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