Sterling interest rate swaps, market

Market makers in sterling interest rate swaps. 

The market in dollar, euro, and sterling interest rate swaps is very large and very liquid. These are the most important type of swaps in terms of transaction volume. They are used to manage and hedge interest rate exposure or to speculate on the direction of interest rates. 

At the time of this writing, corporate bonds denominated in currencies others than euro and sterling are only exposed to the local interest factors and if it exists, the swap factor. This swap factor is roughly equivalent to a financial AA spread factor, as the bulk of organizations that engage in swaps are AA-rated financial institutions. The swap model is coarser than the two local credit models discussed in the next section, but it performs adequately because spread changes are highly correlated within markets. 

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