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Topic: Equity swaps

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	Swapping Country Risk - Forbes.com (Site not responding. Last check: 2007-09-17)
		Swaps transfer risk while leaving the flows of capital largely untouched, thus minimizing the need for institutional change when diversifying.
		In this context, Merton proposes using equity swaps as a means of efficiently managing a country's risk exposure and improving national risk profiles.
		Swaps are bilateral agreements or contracts, and thus do not require an "exchange." New types of swaps can be created and implemented as soon as two consenting parties are willing to enter into a contractual agreement.
	www.forbes.com /home/business/2005/03/18/cz_0318oxan_riskswaps.html (1269 words)

	Equity Swaps
		Having discussed interest rate swaps and their cross-currency extension to currency swaps as exchanges of cash flows predicated on pre-set indices, it is natural for us to think of structuring swaps involving non-interest indices.
		Equity swaps are exchanges of cash flows in which at least one of the indices is an equity index.
		Equity swaps are powerful tools in the hand of the passive investment manager, the investor looking to tailor the timing of his tax events, investment managers looking for opportunities abroad and the average investor looking to enhance his return despite the letter of government provisos.
	www.victoryrisk.com /equity_swaps.htm (1399 words)

	Equity Swap
		A swap in which at least one party’s payments are based on the rate of return of an equity index, such as the SandP 500.
		Equity swaps provide an easy and inexpensive means of reallocating a portfolio to a different equity sector.
		Equity swaps can also be concentrated on specific industries, market sectors, or even individual stocks, though the latter is not common.
	www.russell.com /US/glossary/derivatives/equity_swap.htm (244 words)

	Unasylva - No. 188 - Funding sustainable forestry - Debt-for-nature swaps: a decade of experience and new directions ...
		However, the swap raised a lot of controversy and encountered delays before implementation owing to a combination of factors: a lack of open participation by 1 organizations in Bolivia; some misperceptions of the swap agreement, fuelled by misleading press reports; and the newness of the debt-for-nature swap concept (FAO, 1993; Conservation International, 1989).
		In the case of debt swaps, the financial multiplier enhanced donor interest in debt swaps, but several factors have eroded the potential for such multipliers and generally have decreased opportunities for debt swaps in the late 1990s and beyond.
		With debt swaps, the international community has successfully modified the debt-for-nature concept from its inception in 1984 through the mid- 1990s to keep it fresh and innovative and thus an effective means for financing conservation.
	www.fao.org /docrep/w3247e/w3247e06.htm (3474 words)

	Credit and Finance Risk Analysis - Interest Rate, Cross-Currency and Equity Swaps
		Cross-Currency swap: the purpose of a cross-currency swap is to convert one party's exposure in one currency to another currency by exchanging interest rate flows or payments denominated in different currencies (based on predetermined notional amounts).
		Equity swap: a swap dealer and an investor swap the returns on two different assets - for one to five years one pays the other stock returns on a hypothetical investment and receives in return a money market interest rate.
		Interest rate swaps: contract in which two parties agree to exchange interest payments of differing character (indexed to two different rates) based on an underlying notional principal (the actual notional principal is not traded, just the cash flow yield).
	www.credfinrisk.com /swaps.html (555 words)

	Equity swaps and disclosure - Stephen Bartholomeusz - Opinion - theage.com.au
		The reference is to an equity swap arrangement BHP entered into with Deutsche Bank at the onset of its WMC bid.
		Its use of an equity swap has, however, added to the focus on derivatives and concerns that, because they don't create a relevant interest in underlying shares held by the counter-party, they could be used to circumvent disclosure rules and the Takeovers Code.
		The recent flurry of equity swaps isn't surprising, given the growing use of derivatives in the market and the rapidly increasing presence of hedge funds, for whom investment is about exposure, not ownership.
	www.theage.com.au /news/Stephen-Bartholomeusz/Equity-swaps-and-disclosure/2005/06/06/1117910239230.html (952 words)

	China Gets Ready for Debt
		The swap of debt for equity is intended to reduce the leverage (debt-to-equity ratio) of state enterprises—estimated to be around 70 percent of assets on average—provide them with additional funds for investment in technological upgrading, and pave the way for stock market listing.
		The swaps are confined to debts contracted before 1996, to prevent banks and enterprises from engaging in reckless lending and borrowing in response to the program.
		The swap explicitly excludes the debts of the country’s scores of investment trust companies and credit cooperatives, many of which are also laden with nonperforming loans and some of which have defaulted on their obligations.
	www.worldbank.org /html/prddr/trans/janfeb00/pgs15-16.htm (1229 words)

	FPA Journal - Between the Issues - Essays - Social Security and Equity Swaps Part I
		The chief virtue of the plan is the fact that these equity swaps would not place voting rights over common shares with the SSA as would be true should the SSA invest directly into the equity market.
		Some examples of the use of swaps include: (1) Canadian pension funds’ use of swaps to increase their exposure to international markets (Chernoff 1998), (2) Amoco’s use of swaps to gain exposure to the Japanese stock market (Schwimmer 1993) and (3) the Michigan Retirement System five percent asset allocation to international equity swaps (Williams 1996).
		Equity swaps do not confer any voting rights, as the “investment” in stocks is only notional.
	www.fpanet.org /journal/BetweenTheIssues/Essays/040203A.cfm (1841 words)

	Mellon Capital Markets: Introduction to Risk Management (Site not responding. Last check: 2007-09-17)
		An Equity Swap is a swap agreement in which one party makes payments based on either a floating index or a fixed-rate, while the other party makes payments based on the return of an equity index, basket, or single stock.
		In some cases, Equity Swaps made it possible to achieve outcomes that were impossible in the absence of such swaps.
		Equity Swaps are generally priced at a specific rate or at some percentage of the index.
	www.mellon.com /corporatefinancing/derivatives/services.html (1900 words)

	Hedge Fund News \| HedgeWeek \| HedgeMedia (Site not responding. Last check: 2007-09-17)
		In an equity swap, the return on the underlying share is exchanged for a return based on a reference interest rate or yield.
		Sometimes, trading through equity swaps is referred to as `synthetic prime brokerage’ - with the swap contract deployed as a substitute for borrowing stock to achieve a short position, or equity finance to achieve leverage on the long side.
		Equity swaps may hence be used in isolation as a substitute for trading in equities, but also in connection with a wide range of other services depending on the requirements of the fund.
	www.hedgemedia.com /feature.asp?FeatureID=778711A9-448F-4261-80C9-C50C7F736981&CategoryID=529CFC3A-E2F2-4B54-A4C9-388FBFB9A17D (1028 words)

	GARP : Risk News : Risk eNews Article (Site not responding. Last check: 2007-09-17)
		An equity default swap is a credit-like instrument which uses the same structure as a credit default swap except the underlying reference entity is a stock.
		Equity default swaps are a new product that mimic their credit market equivalents, because the definition of an equity default event — a 70% drop in share price from value at inception — is roughly equivalent to a credit event.
		Equity default swaps have been described as bridging the gap between equity and credit and makes the two comparable.
	www.garp.com /risknews/newsfeed.asp?Category=9&MyFile=2004-03-24-8333.html (359 words)

	Harvard University. GSAS. Economics Department. (Site not responding. Last check: 2007-09-17)
		Russia was not only on the receiving end of debt-equity swaps but it also proposed a DES deal to Yemen to swap a $4 billion debt to Russia for an equity stake in a local refinery and to Ukraine to acquire equity in a Ukrainian export gas pipeline.
		Debt-for-equity swaps are likely to make Russia one of the most attractive and active emerging markets in the world within a short period and eventually a global leader in portfolio and direct investment in developing and transition countries.
		One of the main arguments in favor of debt-equity swaps is that they transfer some of responsibility for case-by-case placement of shares from the GOR to investment funds, universal banks and foreign governments’ agents who have much better experience, technical capacity and financial means to fully utilize the potential of Russian equities.
	sangha.net /papers/KORNAI.html (18176 words)

	DFMv1 (Site not responding. Last check: 2007-09-17)
		As with other swaps, these new transactions are expected to coincide better with the debtor's ability to pay and to provide the borrower with sufficient benefits that it will have an interest in the success of the venture.
		Debt-for-nature and debt-for-development swaps include the borrower, the creditor, the environmental or developmental group promoting the swap, the executing agency, and regulators responsible for the specific project area.
		The decision to swap debt for equity in sovereign debtor agencies necessitates at least the partial privatization of a state entity and introduces foreign ownership into a previously national enterprise.
	www.unitar.org /dfm/Resource_Center/TrainingPackage/Tp6/ChVI1/11debt.htm (704 words)

	Hedging Swaps
		Therefore, the swaps dealer will manage the risks of his position using portfolio management techniques that are similar to but more sophisticated than the portfolio management techniques used for a simple cash position in fixed income or equities.
		In categorizing the risk of the swaps portfolio, the dealer must look at different types of yield curve risk including parallel shifts in the yield curve, non-parallel shifts in the yield curve and changes in swap spreads.
		Another reason for not completely hedging the swaps portfolio is the fact that the dealer may carry a proprietary position in one or more aspects of the risk.
	www.finpipe.com /hedgeswaps.htm (1219 words)

	FPA Journal - Between the Issues - Essays - Social Security and Equity Swaps Part II
		Such long-term equity swaps do not currently exist in great numbers, so the SSA would be breaking new ground with these instruments.
		In a sharp departure from traditional swaps, the notional principal would be adjusted at each payment point such that it is equal to the market value of the equity portion of the trust.
		The equity portion of the trust would be $482.04 million ($468 million plus $37.44 million increase in value of the stocks minus $23.4 million of stocks sold to generate the cash needed to pay the SSA), a three percent increase over the previous equities value.
	www.fpanet.net /journal/BetweenTheIssues/Essays/040203B.cfm (2927 words)

	Swap (finance) (Site not responding. Last check: 2007-09-17)
		A swap is essentially an agreement in both parties agree to exchange a strip future interest payments; one party paying fixed payments and one party paying floating interest on some notional value.
		The value of the swap is the present value of all future interest payments.
		In Leonard and Swap's book, "When Sparks Fly: Igniting creativity in groups," the authors acknowledge that with the right physical and psychological group environment, creativity can easily emerge from all members of a group.
	www.freeglossary.com /Swap_(finance) (435 words)

	Wilmott Forums - Equity Swaps
		An equity swap is usually an arrangement whereby one side pays total equity returns (capital gains plus dividends including tax adjustments) and the other side pays a floating rate, LIBOR - X bps.
		The equity returns need to be paid regardless of whether or not these returns are higher or lower than the interest rate on the other leg.
		If the equity swap is Index vs Fixed, we need to anticipate the path of the stock, because we need to fund the net inflow/outflow at a fixed rate.
	www.wilmott.com /messageview.cfm?catid=8&threadid=3011 (2419 words)

	Free Lunch or Last Supper? China's Debt-Equity Swaps in Context
		Because debt-equity swaps ar e still in their infancy in China (the first swap took place in September 1999, and since then several hundred firms have undergone the process), it is too early to judge their efficacy.
		Debt-equity swaps are thus a sort of response, 16 years later, to the 1984 policy of shifting SOE financing from direct subsidies to bank loans (bo gai dai).
		After all, equity financing is generally more expensive than debt financing over the long run (otherwise, why would an investor purchase equity if he or she could achieve higher returns by simply putting money in the bank?), and the swap itself is an indicator of default.
	www.chinabusinessreview.com /public/0007/steinfeld.html (5022 words)

	Maquiladora Industry (CIP) -- Debt/Equity Swaps (Site not responding. Last check: 2007-09-17)
		We have found that, while the swap transactions are typically the same, some taxpayers structure the swap in such a way as to disguise or hide the gain.
		Comm'r, 103 T.C. 59 (1994), which involved a typical debt/equity swap, the Tax Court found that the restrictions imposed on the pesos and on the stock received by the taxpayer were not significant and did not affect their value.
		Consequently, the court held that the taxpayer had taxable gain under section 1001 on the exchange of the debt for the pesos measured by the difference between the value of the pesos received by the taxpayer, as determined according to the free market exchange rate, and taxpayer's basis in the debt.
	www.dooley.co.uk /text/14maqdes.htm (1859 words)

	Inspection to look into debt-to-equity swaps - Laws & Regulations - Business - Newsgd
		The debts were transferred into equities the AMCs controlled in the enterprises.
		Normally, a new holding company would be launched after the swap based on the new equity structure.
		The programme was supposed to help the debt-ridden SOEs relieve the debt burden, but some enterprises did not actually finish the swaps after getting the approval, partly due to disparities of opinion on the exact method of restructuring debt settlement.
	www.newsgd.com /business/laws/200411240054.htm (534 words)

	Equity derivative (Site not responding. Last check: 2007-09-17)
		Equity derivatives are financial derivative products whose value is dependent on the value of an underlying share or group of shares.
		Equity index futures and options tend to be in liquid markets for close to delivery contracts.
		Forward prices of equity indices are calculated by computing the cost of carry of holding a long position in the consitutuent parts of the index.
	www.worldhistory.com /wiki/E/Equity-derivative.htm (425 words)

	Commodity Swaps
		Commodity-for-interest swaps are similar to the equity swap in which a total return on the commodity in question is exchanged for some money market rate (plus or minus a spread).
		Thinking of a swap as a strip of at-the-money forwards is also a useful intuitive way of interpreting interest rate swaps or equity swaps.
		Commodity swaps and commodity derivatives are a useful and important tool employed by most leading energy, chemical and agricultural corporations.
	www.victoryrisk.com /commodity_swaps.htm (911 words)

	FEA - @EQUITY - Features
		All @EQUITY functions accept a discrete dividend schedule, a continuous dividend yield, or both (the yield applies after the last discrete dividend date).
		Both constant and proportional dividends are supported (a constant dividend is independent of the equity price on the payment date and a proportional dividend is linked to the equity price).
		@EQUITY functions include domestic models which support a single equity against a base currency (for example, the exchange of USD for USD-denominated equity by a U.S.-based investor).
	www.fea.com /products/equity/features.asp (292 words)

	Equity swaps structure (Site not responding. Last check: 2007-09-17)
		Actors' equity association is the labor union representing american actors and stage managers in the theatre.
		A bank holding company offering online banking with home equity loans, low interest credit cards, home mortgage loans, internet banking, loan calculators focus: globally promote and facilitate european venture capital and private equity welcome to the equity center (formerly the center for national origin, race, and sex equity).
		The equity center is the region x equity residential offers premier apartment rentals from coast to coast.
	www.vulonline.net /equity-swaps-structure/equity-swaps-structure.html (140 words)

	The Jamestown Foundation
		Recent Russian proposals for debt-equity swaps in Central Asia and the Caucasus represent a bold new strategy for extending Russia's influence in the southern tier.
		Debt-for-equity swaps emerged in the 1980s as a palliative to the consequences of heavy sovereign indebtedness in Latin American countries.
		In debt-for-equity swaps, as in all barter transactions, the true terms of exchange are often distorted because it is so difficult to objectively assess the worth of assets traded.
	www.jamestown.org /publications_details.php?volume_id=401&issue_id=3103&article_id=2368666 (844 words)

	Debt equity swap Resource Web Page (Site not responding. Last check: 2007-09-17)
		alternative to acquiring control through a debt-equity swap: the investor may.acquire the debt and in case of default, enforce the pledge.
		debt equity swap financial definition of debt equity swap.
		This was the largest debt-equity swap ever signed in Ningxia, This debt-equityswap helps Lingwu cut down its bank interest by 71 million yuan.
	www.blancherose.ab.ca /debt_equity_swap.html (469 words)

	DERIVATIVES WEEK : Derivatives, Futures & Options News
		Turf wars at firms with newly merged structuring desks are impeding the development of collateralized debt obligations referenced to equity-default swaps.
		One structurer who had worked at a firm with combined credit and equity desks putting together these deals agreed that there is a tug-of-war going on at firms.
		An official at one of the firms said he expects at least three years to pass before firms have fully merged their credit and equity groups and investors turn to CDS traders for an EDS price.
	www.derivativesweek.com /?page=1&SID=503559&ISS=15372 (373 words)

	Business America: Debt-equity swaps help Latin America out of its debt dilemma
		To date, billions of dollars in debt "swaps" have occurred, part of which has yielded important equity investments in Latin American countries.
		Many multinational corporations have utilized debt-to-equity swaps in order to increase investment in their subsidiaries or start up new operations.
		Alternately, the loan to one debtor (for example, a public sector enterprise or the central bank) can be converted into equity in a completely different entity (for example, a private company).
	www.findarticles.com /p/articles/mi_m1052/is_v10/ai_4655519 (1250 words)

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