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  • October 27, 2022
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Tax-Exempt Swaption

An option on a municipal swap, such as BMA fixed/ floating swaps, in which the floating leg payments are based upon the US Bond Market Association Municipal Swap Index (the “BMA Index”). The BMA index is usually 65%-70% of its taxable equivalent, 1-month LIBOR. Payment is based upon an average of the weekly BMA index resets. The rates are weighted by the number of days of overlap between the 7-day rate period and the payment calculation period (i.e., 7 if the week falls entirely within the payment period, or less if there is only partial overlap).


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