§ 159-194. Swap agreements.
§ 159‑194. Swap agreements.
(a) Subject to the provisions of this Article, a governmentalunit may from time to time purchase, enter into, modify, amend, or terminateone or more swap agreements that it determines are necessary or desirable inconnection with the issuance, incurrence, carrying, or securing of obligations.This authorization also includes the authority to enter into modifications orreversals of a swap agreement previously entered into by the governmental unitand the authority to enter into a swap agreement that modifies the interestrate payment calculation method under a swap agreement previously entered intoto another interest rate calculation method or that reverses, in whole or inpart, the effect of a prior swap agreement on the governmental unit's interestrate cost or risk. A swap agreement entered into by a governmental unit maycontain any provisions, including provisions regarding payments, term,termination payments, security, default, and remedies, and may be with anyparties, that the governmental unit determines are necessary or desirable.
(b) No governmental unit shall enter into a swap agreementpursuant to this Article other than for the primary purpose of managinginterest rate risk on or interest rate costs of its obligations. A swapagreement may provide that the payments thereunder are based upon a fixed orvariable interest rate calculation method. A governmental unit shall not engagein the business of acting as a dealer in swap agreements. A swap agreement maybe entered into in connection with specific obligations of the governmentalunit, which may consist of multiple series or issues of obligations asspecified by the governmental unit. The swap agreement may be entered into at atime before, at the same time as, or after, the obligations are issued orincurred by the governmental unit. Each swap agreement may be entered for anotional amount up to, but not exceeding, the principal amount of theobligations with respect to which the swap agreement is entered. A swap agreementmay have a term as long as, or less than, the term of the obligations withrespect to which the swap agreement is entered.
(c) In connection with entering into a swap agreement, agovernmental unit may enter into credit enhancement agreements to secure theobligations of the governmental unit under the swap agreement, with anypayment, security, default, remedy, and other terms and conditions that thegovernmental unit determines, including entering into binding agreements todeliver collateral, either at the time the swap agreement is entered into or atfuture times under conditions set forth in the swap agreement. (2003‑388, s. 4.)