What does Rollercoaster Swap mean?
A rollercoaster swap is a seasonal swap in which the payments may vary at different types; i.e. at predetermined time periods thereby providing flexibility of payments. It is useful and common for organizations that need cyclical financing in view of products which are cyclical in nature. The organization can match its cash flows to enter into such an arrangement; they can arrange their payments to ensure higher payments at times of high seasonal sales and ensure their financial needs are met for the full year.
Futures Knowledge Explains Rollercoaster Swap
For example, company ABC in UK sells specialized winter clothing may have interest in a rollercoaster swap because it can match swap payments with the seasonal demand for its products.