apologies. It&#x27;s not obvious because the jargon is opaque (though I still question why, if it&#x27;s not understood, it&#x27;s upvoted to page 1).<p>In swaps, as the word suggests, you must pay (the prevailing short-term interest rate) every few months for the right to receive a pre-agreed (long term) interest rate. The key is that you must pay, and if your counterparty does not pay, you will not pay either. So you have a much lower credit risk than an outright lending of money since if the counterparty starts failing, you can stop paying. Sure there is still some credit risk, but it&#x27;s nowhere near as high as it would be to lend money for 10 years &quot;naked&quot;. And since the crisis, moreover, we have &quot;daily margining&quot;, that is, if you win in any 24 hour period, your counterparty must pay your winnings. If he doesn&#x27;t you can cancel the contract. That&#x27;s much lower risk than betting on repayment with no feedback, for 10 years.<p>I&#x27;m just generally quite &quot;surprised&quot; that this stuff is coming out of Bloomberg who should know better.